KARACHI: The demand for dollars remains high in the open market, currency dealers informed the State Bank on Wednesday.

During a meeting, the central bank asked the currency dealer to do more to bring the kerb rates down.

Currency dealers claimed the dollar demand “was coming from a variety of sources.”

“Within a year, Pakistanis bought $1.3 billion to deposit in their accounts,” said Malik Bostan, president Forex Association of Pakistan.

Demand is also coming from Pakistani importers who are buying dollars from the open market to settle their accounts in imports from China due to upcoming holidays there which are scheduled to start from Feb 5.

He said thousands of Chinese living in Pakistan and doing business at retail level have rupees and are buying dollars or any foreign currency. “This has increased the demand for foreign currency which ultimately translates into more dollars being sold,” he explained. Foreign currencies are exported to Dubai and dollars of the same amount are imported, he added.

The State Bank was informed that the government’s plan to launch dollar denominated bonds saving scheme is spurring hoarding of dollars since the bonds are expected to yield 5 per cent per annum while banks’ return is just 1pc.

It was also discussed that the fear of devaluation led to dollar buying spree at the public level and proved correct – denting confidence in local currency.

Published in Dawn, February 1st, 2018