KARACHI: The rupee’s fall seems to have dissipated due to excess supply of dollars in the open market amid seasonal effect of Ramazan followed by disappearing interest from buyers.

“The inflow is high while the demand is almost at zero level. I believe currency dealers will deposit up to $5 million surplus per day in the banks till Eid,” said Exchange Companies Association of Pakistan Secretary General Zafar Paracha.

Buyers have also lost interest in dollar after rupee gained Rs4 against the greenback in the last week.

Currency dealers said the demand for dollars has declined in the open market and is being sold Rs150.50 down from Rs154.50 at the beginning of the week.

“But the main reason for this decline in the dollar price was the rates in the interbank market which showed a declining trend during the week after touching Rs152.5,” Paracha said.

Currency dealers also claim that workers’ remittances have increased by almost 10 per cent during the ongoing month as overseas Pakistanis who return to their country with dollars for Ramazan festivities have a greater impact in the open market.

“Overseas Pakistanis bring dollars and other currency and their selling in the open market has real impact; it has increased between 10-15pc so far during Ramadan,” said President Forex Association of Pakistan Malik Bostan.

The government had urged investors to avoid buying dollars who had flocked to the currency market following the fall in rupee’s value.

“This is the best lesson for the dollar hoarders as they have lost Rs3 within three days and would lose more if they don’t sell their holdings within days,” he said.

There is a strong perception in the market that the devaluation was the outcome of agreement with the International Monetary Fund.

“I believe that recent fall in dollar price is not the devaluation of greenback; instead it is a correction,” said Paracha.

The government’s announcement that Saudi Arabia has agreed to supply oil to Pakistan on deferred payments has also had a significant impact of exchange rate.

The interbank market witnessed an uneventful day on Friday as demand dropped sharply. A banker explained that importers did not buy dollars as they decided to wait for further drop in rupee’s value.

“We have sold $5m on advance for Monday and Tuesday to the banks due to closure of banks on Saturday,” said Bostan.

Branches of other currency dealers from different parts of Karachi and across the country could not deposit their holdings in the banks and sold it to their head offices and big currency dealers.

“Banks are buying dollar at Rs150.50 from us,” said Bostan.

“The Wednesday’s inflow would certainly see a big cut in the dollar rates,” he added.

Published in Dawn, May 26th, 2019