KARACHI: The demand for Saudi riyals unexpectedly increased by 30% in the open market, but the price remained consistent, Malik Bostan Chairman of Exchange Companies Association of Pakistan (ECAP) said on Tuesday.
“The purchase of Saudi riyals for Umrah normally begins before Ramadan. “Within a period of three to four days, purchases of Saudi currency increased by 30 percent, reflecting the urgency for Umrah this year,” he said.
In the past year, an all-time high 800,000 Pakistanis performed Umrah during Ramadan. Currency brokers said it is too soon to estimate the overall number of Umrah pilgrims this year, but the fast increase indicates an upward trend.
The current open market price of the Saudi riyal was between Rs74.50 and Rs75, indicating abundant supply despite a jump in demand.
“We ship foreign currency to Dubai and purchase US dollars. According to Mr Bostan, the Saudi riyal accounts for around 60% of all exportable foreign currencies. The monthly export of foreign currencies is approximately $30 million.
The open market is a major source of dollars along with other foreign currencies, and commercial banks acquire millions of dollars every working day. In January, foreign exchange firms sold $300 million to banks, according to Mr Bostan.
Earlier, ECAP General Secretary Zafar Paracha stated that the exchange companies sold $3 billion to commercial banks throughout the first seven months of the current fiscal year (July-January).
Currency dealers reported foreign currency inflows had grown in the last two months, reflecting greater remittances than the previous year. Remittances fell by 3 percent over the first seven months of this year.
“Trading is regular in the open market although a greater need for Saudi riyals as the inflows have been increasing for the past couple of months,” he told Reuters.
The government and the State Bank of Pakistan (SBP) have successfully maintained a steady currency rate with little changes. In more than two months, the majority of currencies’ rates have remained relatively stable.
“The rate of exchange is the sole indication of an equilibrium on external economic front as the SBP foreign exchange reserves aren’t feasible, especially in light of anticipated payments for servicing debt in the second half of FY24,” stated a financial analyst.
The State Bank now has foreign exchange reserves of around $8 billion, the majority of which has been borrowed from Saudi Arabia, the UAE, and China. The analyst stated that this condition should not be deemed stable.
SOURCE: DAWN NEWS
