KARACHI: For the first time since the Covid-19 pandemic hit the country, currency dealers in the open market deposited the highest amount of $290 million in banks in July.

“The inflow of dollars was very high in July reflecting the growth in the remittances while domestic holders of the greenback were selling their savings in the open market,” said Forex Association of Pakistan President Malik Bostan on Friday.

Since the emergence of Covid-19, inflow of dollars drastically decreased but has improved after the declining number of new cases in the country.

Currency dealers said the exchange rate is stable with the increase in remittances but expressed fears that withdrawal of Saudi funds in the State Bank of Pakistan and stoppage of deferred oil payments could hurt the parity.

The pressure on exchange rate in the interbank market is visible as the dollar remained on higher side at Rs168. Recently, Saudi Arabia reportedly withdrew $1 billion out of its $3bn kept with the SBP to support Pakistan’s current account.

Official data shows that currency dealers deposited $333m in March; the month when coronavirus emerged with full force in the country. Since then, the flow of greenback from open market to banks dropped to $117m in April before improving to $230m in May, and finally reaching $290m in July.

“During 2019-20, the currency dealers deposited about $3bn in banks which supported them to keep deposits at the higher level,” said Bostan.

“Currently we are depositing $10-12m per day in the banks which may come over $3bn at the end of this fiscal year,” he said. However, the foreign exchange reserves of the commercial banks increased during the last 6 months and currently stand around $7.45bn.

Currency dealers said the domestic buying of dollars is almost insignificant, which is why they were able to deposit large amounts in the banks.

According to them, lack of buying for Umrah has led to surplus of dollars in the local market. Moreover, outflow from the open market also dropped due to dip in health and education-related purposes. The country received record $23bn in FY20 which helped the government to reduce its current account deficit.

Published in Dawn, August 15th, 2020