The rising trade deficit, reduction in remittances and foreign direct investment have started building pressure on the interbank markets, which rose by around 20 paisa while it gained 40 paisa on Monday in open market.
In the open currency market, the dollar closed at above 106.80 for buying and Rs 107.10 for selling while in interbank it closed at 104.80 for buying and Rs 104.90 for selling.
“The remittances coming from abroad in the real estate industry have been stopped since last July 2016 after restructuring in deputy commissioner (DC) valuation rates and Capital Gain Tax imposed by the ministry of Finance,” the industry source said. In last four months the remittances had been shrunk by 3.9 per cent only because of the property valuation and taxes while the Federal Board of Revenue (FBR) and Federal Investigation Agencies (FIA) have also started investigating remittances coming through Exchange Companies, he added.
He claimed, “Pakistani people settled abroad were sending or investing millions of dollar in the property markets to get higher profits but after impositions of this new property valuations and three-year capital gain tax, they faced hurdles in the real estate businesses in Pakistan.”
“The demand of the greenback has gone up in the open currency market for last two weeks,” said a money changer in Karachi. “The dollar is being sold at above Rs 107 for last three working days, but the official rates of the money change are below Rs 107,” he claimed.
In the interbank market, the dollar suddenly jumped by 20 paisas on Monday closing at Rs 104.80 for buying and Rs 104.90 for selling. “The demand was coming from big importers and oil companies,” said a treasurer of a private bank. “Remittances and exports of the country have been declined in last four months which impacts are coming on the dollar,” the official said. In last four months, the country’s imports had crossed $15 billion mark while exports are stood at $6.432 billion.
For last few days, the banker said that there were also rumours in the market that the government would devalue the local currency against greenback and other international currencies.
“The main reason behind this decline is international gold prices, which have been sliding in the world that’s why the investors are purchasing dollar in open market,” said Pakistan Forex Association President Malik Bostan. Small gold importers purchase dollar from the open market, he said.
The gold had decreased in London gold market and was traded at around $1223 per ounce. He further informed that banks’ only source of dollar was country’s remittances and exports which have been declining for a long period. ‘If the remittances, exports and Foreign Direct Investment did not increase, the dollar may go up in the Interbank and Kerb’, he claimed.
He said the people invested where they thought their investment was saved therefore in Pakistan ordinary people are coming in the foreign currencies.
Mr Bostan said the current fluctuation in the local currency market could be a temporary and there was a hope that it would be stable again at around Rs 105 to Rs 105.50.