KARACHI: The US dollar on Tuesday crossed the Rs175 mark to set a new record, sparking fears that people would opt to save their money in dollars instead of keeping it in banks.

Currency dealers said the inter-bank market traded the dollar at record Rs175.27. The dollar gained 84 paisa in a single session.

“The importers’ pressure for buying dollars is still high. Nobody knows where is the boundary of this devaluation of local currency,” said Atif Ahmed, a currency dealer in the inter-bank market.

He said a further increase in dollar price could trigger very high inflation in the country that would ultimately hit economic growth. He said the country’s import bill, which was $53 billion last year, could be more than $60bn this year. In terms of rupee, the total import will be worth Rs10.5 trillion which is enough to escalate inflation beyond imagination.

According to the currency dealers, the FIA is asking for data of buyers that has led to a reduction in buying of dollars from the open market. They expressed the fear that a black market could emerge if the legal way of buying dollars is restricted.

Since the start of the fiscal year 2021-22, the dollar has gained about 11 per cent against the rupee, while it gained Rs23 since May when the dollar was traded at Rs152.28.

Meanwhile, the State Bank said the Real Effective Exchange Rate (REER) index fell to 95.9 in September this year, depreciating 0.7pc compared to the last month. “Cumulatively, REER has depreciated by 4 per cent since the beginning of FY22 and by around 7 per cent from its recent peak of 103 in Apr-21,” the SBB said in a tweet on Tuesday.