KARACHI: Despite higher flow of remittances due to Eidul Azha, the dollar appreciated against the rupee on Saturday, the last trading day ahead of long holidays to celebrate the festive occasion, said currency dealers and bankers.

The country received about $2 billion in remittances in July slightly higher than the last year but the currency dealers said the real impact would be reflected in August numbers.

“I am sure the remittances have increased by 20 per cent due to Eid but the exact data will be available next week,” said Malik Bostan, President Forex Association of Pakistan.

Bankers said the dollar rates were higher in the second session on Friday selling at Rs158.80, which means higher tom value (tomorrow value) because the interbank market will remain closed for almost 10 days and open next Friday.

The demand for dollar was extremely low both in open and interbank markets, said bankers and dealers.

“The dollar rate rose to Rs159.50 in the open market on Saturday but the there negligible demand for the greenbacks,” said Bostan.

However, the most serious concern was that the demand for dollar from importers has almost disappeared.

“Importers are not buying dollars as they had been borrowing in the past several years. We don’t have the exact idea why importers are not buying but I believe drastic drop in imports is immanent this year,” said a senior banker dealing in currency market.

The government has been discouraging imports to improve its balance sheet that is dominated by huge gap between import and exports. The imports dropped by $4.15bn. The impact of the low imports helped the country to reduce its current account deficit to $13.587bn (declined by $6.3bn) in FY19.

“One of the reasons for low import is higher cost of dollars which added cost to the products being produced through imported materials. This kind of importers are waiting for the settlement of exchange rate,” said the banker.

Published in Dawn, August 11th, 2019