KARACHI: With dollar inflows low and falling foreign exchange reserves, the dollar is appreciating against the rupee for the first time in Ramazan, said currency dealers.
And worries over further depreciation in the rupee against the dollar are also rising, as foreign exchange reserves dipped to $10 billion and fall into single digits, reported Dawn.
Low inflow of dollars from overseas Pakistani’s and dipping forex reserves have increased demand and prices in the kerb market.
The dollar has seen rates rise to Rs119.50 in the kerb market and price differential with inter-bank market also touched a zenith.
Zafar Paracha, Secretary General of Exchange Companies Association of Pakistan (ECAP) said he had never witnessed dollar appreciation in Ramazan and was the first time it was rising against the rupee in the holy month.
He added remittances from overseas Pakistani’s had witnessed a major fall and people weren’t selling their holdings in the market out of worries the rupee would devalue again.
Every year, the inflow of foreign increases tends to rise after first ten days of Ramazan and charity proceeds (Zakat) also show their presence in the kerb market during Ramazan.
The differential between the kerb and inter-bank market rates has touched around Rs4 per dollar as inter-bank prices were around Rs115.60-115.70 on Thursday.
Due to this big differential between the kerb and inter-bank market rates provides an attractive opportunity for illegal transactions.
In this event, overseas Pakistan can fetch thousands of rupees in excess on their transactions whilst Hawala and Hundi gives an additional Rs1 more on each dollar transaction.
Paracha said this price differential could impact remittances via legal banking channel.