In the open market, the dollar surged to record Rs89 and Rs89.20 for buying and selling while in the inter-bank market it traded at Rs87.55 and Rs87.60. — File Photo

KARACHI: The fear of shrinking inflows of dollars kept the rupee under pressure which hit a new low versus the US dollar on Thursday.

However, currency experts said investors diverting funds for buying US dollars since the gold had been facing frequent wide fluctuations causing losses to them.

Furthermore, black money also entered the dollar market pushing up the demand in addition to huge buying for Haj.

In the open market, the dollar surged to record Rs89 and Rs89.20 for buying and selling while in the inter-bank market it traded at Rs87.55 and Rs87.60.

“Since the government has allowed people to buy dollars or Saudi riyals from the open market for Haj, the demand rose sharply pushing up prices,” said Malik Bostan, Chairman Exchange Companies Association of Pakistan. Earlier, the government was used to provide $1,000 to each intending haj pilgrim.

“The black money in the form of old Rs500 notes, which will be no more useful after September 30, has entered the currency market to buy dollars instead of depositing it in banks,” said Bostan.

The tide was high in the open market while the inter-bank market noted slight improvement compared to previous day. Bostan said the dollar would fall after September 30 and it could be even less than Rs88.

However, the currency dealers in the inter-bank market said the dollar gained due to rising fear that dollar inflows have been shrinking.

“The dollar gained due to large payments in the recent weeks but the gain seems to have other reasons also including worsening relation of Pakistan with Washington,” said Atif Ahmed, a currency dealer in the inter-bank.

He said the fear was dominant in the rupee-dollar parity and it may continue unless Pakistan finds a way out from the US pressure and maintain a normal relation with Washington.

Currency experts said if the country fails to mend its relation with US and the IMF it will have to face negative response from other lending agencies.

They said Pakistan would have to rely on remittances and export proceeds for foreign exchange reserves, which have already started falling. The reserves will further fall from next year when the repayment to IMF starts.

Anwar Jamal, a currency dealer and expert on currency movements, said investment from gold had started flying out.

“Further investment in gold is not feasible as it has started causing losses due to wide and frequent fluctuations in prices. The investment is coming out from gold to take refuge in US dollar still strong to yield profit,” said Jamal.

He said the euro was under huge burden of debt while British Pound was not attractive since England was faced with serious economic problems.