KARACHI: With dollar inflows low and falling foreign exchange reserves, thedollar 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 arealso rising, as foreign exchange reserves dipped to $10 billion and fallinto single digits, reported *Dawn.*
Low inflow of dollars from overseas Pakistani’s and dipping forex reserveshave increased demand and prices in the kerb market.
The dollar has seen rates rise to Rs119.50 in the kerb market and pricedifferential with inter-bank market also touched a zenith.
Zafar Paracha, Secretary General of Exchange Companies Association ofPakistan (ECAP) said he had never witnessed dollar appreciation in Ramazanand 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 falland people weren’t selling their holdings in the market out of worries therupee would devalue again.
Every year, the inflow of foreign increases tends to rise after first tendays of Ramazan and charity proceeds (Zakat) also show their presence inthe kerb market during Ramazan.
The differential between the kerb and inter-bank market rates has touchedaround Rs4 per dollar as inter-bank prices were around Rs115.60-115.70 onThursday.
Due to this big differential between the kerb and inter-bank market ratesprovides an attractive opportunity for illegal transactions.
In this event, overseas Pakistan can fetch thousands of rupees in excess ontheir transactions whilst Hawala and Hundi gives an additional Rs1 more oneach dollar transaction.
Paracha said this price differential could impact remittances via legalbanking channel.