KARACHI:
Although the Greece economic crisis did not make a direct impact on Pakistan, dollar’s deep attachment with the issue was reflected in the currency market and exchange rates.
According to a report published in Dawn, Market experts said that the crisis weakened the euro, and ultimately the dollar gained against all major currencies, including the rupee.
Despite heavy inflow of dollars in Ramazan, the greenback did not shed weight against the local currency.
The Forex Association of Pakistan reported on Saturday that the dollar was traded as high as Rs103.05.
Currency dealers in the open market said that the demand was high due to traders’ reaction over withholding tax on cash transactions. Traders started buying dollars instead of keeping deposits in banks. Despite temporary relief announced by the government for non-filers, agitation still continues in Karachi and it may take a new turn after the Eid holidays.
The government has halved the WHT to 0.3pc until September 30, 2015 and ordered banks to refund the deducted amount to tax-filers.
On Jan 16, euro hit a fresh 11-year low against the dollar as fallout from the Swiss decision to remove their currency controls continued to spark volatility across the global foreign exchange market.
The 19-nation single currency dipped 1.5 per cent to $1.14, its weakest level since 2003 as investors bet that the European Central Bank could announce a hefty package for the struggling eurozone economy.
The euro has dipped to Rs113.5 from Rs117 in the last six months of this calendar, recording a loss of 3.4 per cent against the local currency.
Currency experts believe that in case of prolonged Greece crisis, the dollar will gain further against all currencies, including euro and rupee. Experts say that after Ramazan the dollar could see another hike since the demand is still up despite high inflows. The inflows will become normal after Eid.
According to the State Bank the country’s foreign exchange reserves soared to a record level of $18.714bn on the back of heavy dollar inflows. However the greenback kept its pressure on the local currency.