Inflows increase as rupee stabilises in open market

KARACHI: The inflows of dollars increased significantly during the week that ended on Friday, as the rupee’s appreciation against the greenback has narrowed the price gap between the open and interbank markets, currency dealers said.

The dollar was traded in the range of Rs288 to Rs291 in the open market on Saturday, which narrowed the dollar price gap with the interbank market.

According to currency dealers, inflows from exports and remittances have significantly exceeded the daily average of $3-$5 million.

“During the week, the inflows increased by at least 20pc due to a narrow gap between the open and interbank market,” said Malik Bostan, Chairman, the Exchange Companies Association of Pakistan.

He said that both remittances and export proceeds have increased, resulting in higher liquidity in the market. The exporters, who were previously receiving up to Rs313 per dollar, are now obtaining a maximum of Rs288-Rs291 in the open market, which is close to the interbank market rate of Rs286.74.

The country has collectively lost about $7.2 billion due to low remittances and declining exports during the 11 months of the current fiscal year, FY23.

“The exporters were initially unwilling to sell their proceeds in order to earn a higher amount of rupees. However, due to the falling dollar prices in the open market, they were forced to sell their proceeds before the prices fell further,” Mr Bostan said.

He stated that during the last three days of this week, the inflows of remittances have also increased at a fast pace, while the demand has decreased due to various reasons. The dollar price in Dubai is approximately Rs301. The State Bank of Pakistan (SBP) has relaxed import rules to indicate the presence of liquidity. The country has already spent $49 billion on imports during the 11 months of this fiscal year.