Dollar rises on soaring demand

Published May 22, 2015
The US dollar rose to as high as Rs103.35 in the open market on Thursday. -Reuters/File
The US dollar rose to as high as Rs103.35 in the open market on Thursday. -Reuters/File

KARACHI: The US dollar rose to as high as Rs103.35 in the open market on Thursday, as buying from the families planning to spend their summer vacations abroad picked up pace.

It was the highest price in the recent wave of dollar’s appreciation against the rupee. Currency dealers believed that the dollar buying changed the balance of the market as they had been selling the US currency mostly and receiving low volume of dollars from the customers for conversion into local currency.

“Thousands of families visit the US, Europe and the Far East each year during the summer vacations which requires millions of dollars. This temporarily shakes up the currency market,” said Anwar Jamal, a currency dealer in the open market.

He said 60 per cent people are buying dollars while 40pc are selling their holdings in the market these days.

This imbalance is increasing the currency’s value in the open market while the inter-bank market was also supporting the price since the dollar has crossed Rs102 in the banks’ market after a long time.

Another reason behind the dollar’s rise was Hajj and Umrah season, said Forex Association of Pakistan President Malik Bostan.

He said at least 350,000 people would perform Hajj this year and they have already started buying dollars on fears that the currency would be costlier in the remaining three months.

People have been buying dollars as well as Saudi riyals, he said.

Currency dealers said that the recent waves of terrorism also had an impact on the dollar’s rising demand. “People start buying dollars or stop selling their holdings when there is panic,” said Bostan.

Though the inter-bank market has been showing stability in the exchange rate, the dollar slowly moved up and crossed Rs102 twice this week.

Experts say that despite high foreign exchange reserves, the dollar appreciated in the banking market which was not surprising, but it explains that the local currency is overvalued against the greenback.

The exporters have been exerting pressure on the economic managers to devalue the local currency to boost the declining exports. This strategy, however, has failed in the past and never paid off.

Exporters said that the Ministry of Commerce has asked the government to devalue the local currency by at least 5pc to get better results.

Published in Dawn, May 22nd, 2015

On a mobile phone? Get the Dawn Mobile App: Apple Store | Google Play

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Judiciary’s SOS
Updated 28 Mar, 2024

Judiciary’s SOS

The ball is now in CJP Isa’s court, and he will feel pressure to take action.
Data protection
28 Mar, 2024

Data protection

WHAT do we want? Data protection laws. When do we want them? Immediately. Without delay, if we are to prevent ...
Selling humans
28 Mar, 2024

Selling humans

HUMAN traders feed off economic distress; they peddle promises of a better life to the impoverished who, mired in...
New terror wave
Updated 27 Mar, 2024

New terror wave

The time has come for decisive government action against militancy.
Development costs
27 Mar, 2024

Development costs

A HEFTY escalation of 30pc in the cost of ongoing federal development schemes is one of the many decisions where the...
Aitchison controversy
Updated 27 Mar, 2024

Aitchison controversy

It is hoped that higher authorities realise that politics and nepotism have no place in schools.