KARACHI, May 19: After cracks in the eurozone over Greek crisis, the US dollar became highly attractive, pressing the local currency to shed further weight amid high demand for dollar in the local market.

Currency experts said the eurozone financial crisis has weakened euro and investors have started withdrawing to invest in dollars strengthening the currency to gain against other currencies, including rupee.Currency dealers said that with a fall of foreign exchange reserves of the country, pick in demand from importers and currency investors pulled the dollar to Rs91 in the inter-bank market.

The open market seems to have greater demand as price of greenback has gone up to Rs92.20, signaling the difficult phase for buyers in the coming weeks.

For the last couple of months, exchange rate was relatively stable with slight fluctuations on both sides. However, a sudden change appeared with the weakening of euro.

The euro is in trouble after deep financial crisis started from Greece followed by Spain and Italy.

Currency dealers said investors have started withdrawing from the euro and parking their liquidity into dollar.

Though US economy is itself in trouble, investors strengthened the greenback as it was the only available option.

“The dollar has been dominating Pakistani market, but financial crisis in European Union injected additional strength to the currency while we are facing shortage of it as inflows are limited,” said Atif Ahmed, a currency dealer in the inter-bank market.

Global investors who possess large liquidity are withdrawing their investment also from oil as its prices have started sliding in global market. This huge money is looking for investment that will ultimately join the dollar.

Pakistan’s import payments during the last 10 months of the current fiscal were 14.5 per cent higher than last year. The country had to pay additional $4.197 billion to meet its import that impacted negatively on the reserves of the country.

Currency experts said pressure on local currency could mount in the coming weeks as demand would remain high. Higher demand is due to lowest inflows of dollars from abroad.

Except remittances still growing over 20 per cent, no option is open for Pakistan to tap foreign exchange.

“The Hajj and Umrah season has started for which dollars are in high demand,” said Anwar Jamal, a currency dealer in the open market.

He said dollar is also required in bulk for Pakistanis who enjoy their summer vacations in US and other European countries.

“The rising demand of dollar in the open market has created a wide gap between the two rates of inter-bank and open market,” said Jamal.

The gap in the rates has widened to Rs1.20 per dollar. This is an attractive situation for speculators and currency traders who operate Hundi and Hawala systems (both illegal) for transactions.

Earlier, the State Bank helped to maintain a minimum price gap in the two markets to curb speculative forces. However, the falling dollar reserves may not allow the Central Bank to intervene with dollars to cool down the dollar demand.