KARACHI: Inflows of remittances during this Ramazan were slower than the previous year, banks and exchange companies said, but this did not impact the exchange rate in both open and interbank markets.
In the open market, the dollar traded at the same rate, ie Rs105.00-20, against the rupee during the entire holy month. Currency dealers said increase in remittances is a regular feature during Ramazan as they rise by about $300 million to $350m, due mainly to zakat, charity funds and Eid-related spending.
“Though we believe that inflows rise during Ramzan, it’s difficult to assess their size,” said Atif Ahmed, a currency dealer in the interbank market.
Currency dealers in the open market said the dollar remained stronger despite many factors including global currency environment. The euro and British pound, considered as competitive currencies the world over, weakened against the greenback during Ramazan.
“The rise in inflows during Ramazan was not significant which was against the trend,” said Zafar Paracha, the secretary general at the Exchange Companies Association of Pakistan (ECAP).
It is believed that funds sent by overseas Pakistanis and charity organisations might have been diverted from Pakistan to the millions of Syrian refugees living in large camps set up in Turkey, Germany, Greece and other countries.
Though the government is very much satisfied with the record foreign exchange reserves of about $23 billion, the slower growth in remittances and poor inflows during Ramazan must be a cause for worry.
During the last trading day of Ramazan, ie July 4, the dollar traded as high as Rs105.30 in the open market on high demand.
“More people performed Umrah this Ramazan due to low airfares. They consumed most of the inflows in the open market,” said Anwar Jamal, a currency dealer in the open market.
Mr Paracha of ECAP said Ramazan inflows were usually more than double the amount the exchange companies received during this year’s holy month.
The exchange companies normally deposit about $350m to $400m in the banks per month.
Remittances sent by oversees Pakistanis grew 6.0 per cent year-on-year during the first 11 months (July to May) of this fiscal year compared to over 17pc growth a year ago.
Other currency dealers said the demand was not high and sellers were also not in big number as noted in the previous Ramazan. Moreover, they used to face shortage of local currency during the holy month but it did not happen this year.
Before Ramazan, the currency dealers and their representative associations were hopeful that the dollar may fall up to Rs104 due to expected heavy inflows.
At the end of May the dollar crossed Rs106 due to government’s decision to impose 16pc excise duty on gross profits of exchange companies. But the government then withdrew the decision which normalised the exchange rate. Currency dealers said they were importing about $3 million daily from Dubai.