KARACHI: Demand for dollars fell flat with the beginning of Ramazan, and the bullish open currency market was found cool in the hot days of Umrah, foreign tours and school vacations.
The demand for Saudi riyal also fell as the people have either already left for Umrah or are waiting for their turn to leave.
“The market was quiet. No hectic business was witnessed before Ramazan,” said Anwar Jamal, a currency dealer in the open market.
Before Ramazan, the currency market witnessed sharp appreciation in the dollar prices and remained above Rs103. However, when the dollar crossed Rs103 in the inter-bank market, it pushed the dollar prices higher in the open market.
The State Bank came under pressure and announced that it will provide dollar at Rs103 to currency market through national exchange companies. It settled the base price of dollar at Rs103 for the open market.
However, prices started falling ahead of Ramazan as during the holy month, remittances increase substantially while non-resident Pakistanis return home with hard currencies to celebrate Eidul Fitr.
In the absence of inter-bank market, which remains closed on Saturday, the dollar was traded well below Rs103. The greenback selling and buying rates were Rs102.50 and Rs102.80 in the open market.
Currency experts believe that remittances rise at least by 50 per cent in Ramazan which means that the country could receive $1.7bn during the holy month.
Remittances sent by overseas Pakistanis during the first 11 months of the outgoing fiscal year stood at $16.632bn with an average monthly inflow of $1.512bn.
Even if the country receives the amount equal to remittances in May ($1.663bn), the total will soar to record $18.3bn.
Despite these inflows of remittances, the exchange rate remained under pressure of dollar domination while the currency dealers believe the demand and prices could see another hike after Ramazan.