KARACHI: Remittances have sharply increased in Pakistan that may lead to total collection of up to $2 billion during Ramazan, said currency dealers on Saturday.

Each year $300 to $500 million is additionally remitted during Ramazan, mainly on account of zakaat, donations and higher expenses in the holy month and during Eid.

“We believe this year, the inflow is much higher than last year which may add $500m to $700m in the total remittances during the month,” said Malik Bostan, Chairman, Exchange Companies Association of Pakistan.

Average inflow of remittances per month is about $1.3bn in the fiscal year-2014; and with an addition of $700m, the total inflows could be around $2bn for Ramazan.

The immediate impact of higher inflow was felt in the open market where dollar fell to as low as Rs98.90 on Saturday while currency dealers believe that it may fall further at the end of Ramazan when inflows would be at peak.

“The inflow in the open market was much higher than normal days. Most of those reaching us were sellers, buying has dropped to extremely low,” said Anwar Jamal, another currency dealer.

However, it was felt that the inter-bank market showed negative response to this high inflow of remittances. Bankers said the State Bank bought dollars to save it from further fall that hits exporters.

Exporters find them the biggest victim of rupee appreciation which witnessed a total of 9 per cent appreciation against the US dollar in the second half of the fiscal year-2014.

Exporters have been demanding of the government to compensate them with other measures. On Friday, with the influence of State Bank, the dollar rose to Rs98.88, almost equal to the dollar price in the open market on Saturday.

The foreign exchange reserves of both the State Bank and commercial banks have been rising and the total is heading towards $15bn mark.

Pakistan recently received $556m from IMF and another $350 million of Coalition Support Fund is expected next week.

For the last four months, the dollar price remained stable in the country which helped build the country’s image as well as exchange rate regime.

The government is also planning to launch Sukuk (Islamic bonds) to fetch investment from abroad.

Published in Dawn, July 6th, 2014