KARACHI: The dem­a­nd for Saudi riyals suddenly jumped by 30 per cent in the open market but the price remained stable, Exchange Compa­nies Association of Pakistan (ECAP) Chairman Malik Bostan said on Tuesday.

“Buying of Saudi riyals usually starts before Ramazan for Umrah. Within three to four days, the buying of Saudi currency jumped 30pc, reflecting the rush for Umrah this year,” he said.

Last year, a record 800,000 Pakis­tanis performed Umrah in Ramazan. Currency dealers said it is too early to assess the number of Umrah performers this year, but the sudden hike reflects an uptrend.

The current price of Saudi riyal in the open market was in the range of Rs74.50 to Rs75 amid ample availability despite a spike in demand.

“We export foreign currencies to Dubai and buy US dollars. The Saudi riyal constitutes about 60pc of the exportable foreign currencies,” said Mr Bostan. Per month export of foreign currencies is equal to about $30m.

The open market is a big source of dollars and other foreign currencies while the commercial banks receive millions of dollars each working day. In January, exchange companies sold $300m to banks, Mr Bostan said.

Earlier, ECAP General Secretary Zafar Paracha said the exchange companies have sold $3bn to the commercial banks during the first seven months (July to January) of the current fiscal year.

Currency dealers said the inflows of foreign currencies have increased during the last two months reflecting the higher remittances compared to the last year. The remittances in the first seven months of this year declined by 3pc.

“Trading is normal in the open market despite higher demand for Saudi riyals since the inflows are rising for the last couple of months,” he said.

The State Bank of Pakistan (SBP) and the government have succeeded in managing a stable exchange rate with slight fluctuations. Most of the currencies showed little change in their rates in over two months.

“The exchange rate is the only sign of the stability on external economic front since the SBP foreign exchange reserves are not sustainable, particularly in the wake of future payments for debt servicing in the second half of FY24,” said an analyst.

The State Bank currently holds foreign exchange reserves of about $8bn, most of which is borrowed from Saudi Arabia, UAE and China. The analyst said this situation should not be considered stable.

Published in Dawn, February 14th, 2024