The Saudi riyal’s market value unexpectedly increased by 30% on Tuesday, but the price stayed same, according to Exchange Companies Association of Pakistan (ECAP) Chairman Malik Bostan.
For Umrah, Saudi riyal purchases typically begin prior to Ramadan. The purchasing of Saudi cash increased by 30% in just three to four days, he noted, “which reflects the rush this year for Umrah.”
800,000 Pakistanis conducted Umrah in Ramadan last year, setting a record. Although it is too soon to determine how many people would conduct the Umrah this year, currency dealers indicated that the abrupt increase indicates an upward tendency.
Despite a surge in demand, the price of the Saudi riyal on the open market was now between Rs74.50 and Rs75. There was plenty of supply available.
“We purchase US dollars in Dubai and export other currencies. About 60% of the foreign currencies that can be exported are made up of the Saudi riyal, according to Mr. Bostan. The amount of foreign currency exported each month is roughly $30 million.
While the commercial banks receive millions of dollars every working day, the open market is a significant source of dollars and other foreign currencies. According to Mr. Bostan, exchange companies sold $300 million to banks in January.
Prior to this, Zafar Paracha, General Secretary of ECAP, stated that during the first seven months of the current fiscal year (July through January), exchange companies sold $3 billion to commercial banks.
According to currency dealers, the increase in foreign currency inflows over the past two months is a result of higher remittances than they were a year ago. In the first seven months of this year, there was a 3 percent decrease in remittances.
“The open market is experiencing normal trading despite the increased demand for Saudi riyals due to the recent increase in inflows,” the speaker stated.
Together, the government and the State Bank of Pakistan (SBP) have been able to maintain a steady exchange rate with only minor swings. The rates of the majority of the currencies have not changed much in more than two months.
According to one analyst, “the exchange rate is the only indication of stability on the external economic front since the SBP foreign exchange reserves are not sustainable, especially in light of future debt servicing payments in the second half of FY24.”
The State Bank now has $8 billion in foreign exchange reserves, the majority of which it has borrowed from China, Saudi Arabia, and the United Arab Emirates. The expert stated that it would be incorrect to classify this as stable.
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