KARACHI, Oct 6: The US dollar started losing weight against the Pakistani rupee mainly on account of higher supply of the greenback in the open market, foreign exchange dealers said on Thursday.
The dollar lost 25 paisa against the rupee in the last three days to stay at Rs60.15. Exchange companies believe that the currency would shed more weight within a week as dollar supply is on the high side due to Ramazan.
The greenback’s upward movement against the rupee has been alarming and the central bank is trying to control its uppish trend. The SBP has been using banks to control the prices in the inter-bank market, while several exchange companies had to face punitive action, including suspension of licence, to cool down the market.
The Forex Association of Pakistan said that the dollar slide was due to an international pressure on the currency after the two violent storms — Katrina and Rita. However, other currency dealers said that a rush of sellers had led to higher supply of the currency.
“Overseas Pakistanis send more money in Ramazan and it creates an oversupply of the currency,” said Anwar Jamal, a currency dealer, adding that during Ramazan charity funds, including Zakat, came from all over the world into Pakistan.
Since the oil price hike in the international market, the dollar has been in great demand in Pakistan and the State Bank raised the US currency from both inter-bank and open markets to pay oil bills. The State Bank has been paying oil bills since November 2004. However, the unexpected increase in the oil prices put immense pressure on the local currency. The rising demand for dollars in the country gradually took the US unit above the psychological mark of Rs60 in the open market.
“We expect that the greenback would slip below Rs60 in a week,” said Saeed Ammar, another currency dealer. He said remittance in October would be higher compared to the last three months of the current fiscal.
The country received $661.55 million as remittance in two months — July and August. The government expects to receive about $4 billion as remittance during the current fiscal year, which may help it overcome the widening trade deficit due to higher oil bills.
Analysts believe that trade deficit is likely to cross $7 billion by the end of the current fiscal year. Economists feel that the depreciation of the dollar may not be temporary as the currency is also under pressure due to slow world economic growth.