"Prices are down in line with the international trend but this means that there will be more domestic demand and more imports," one dealer said.

However, the dealer said a higher dollar after the central bank effectively devalued the rupee on Monday could push domestic gold prices up.

The State (central) Bank of Pakistan (SBP) said on Monday exporters would now sell and importers would buy 80 per cent of foreign exchange on the interbank market, instead of the previous limit of 50 per cent.

SBP said importers would get 20 per cent of their requirements at the official exchange rate and exporters would have to sell 20 per cent of their earnings at the same rate.

Banks in Pakistan were closed on Monday for public dealing to deduct Zakat, an Islamic tax, from deposits. The tax is deducted on the first day of the holymonth of Ramadan, which started on Monday.

The floating interbank rate for the dollar was last quoted on Saturday at Rs 52.20/52.30 while the official rate was unchanged at Rs 46.00/46.23 to a dollar.

Analysts said the change in the composition of the composite rate would effectively result in devaluation of the rupee against the dollar by more than five per cent.