Dollar gains Rs4.5 in interbank, reaches record high of Rs167
The 8nited States dollar continued its climb against the rupee on Thursday, closing at an all-time high of 5s167 in the interbank market, according to rates provided by the ([change Companies Association of Pakistan. Compared to the opening value of 5s162.5, the dollar rose by 5s4.5, which translates into an increase of 2.77 per cent. Similarly, the rates provided by the State %ank of Pakistan’s ready counter showed the greenback at 5s166.1, up from the opening value of 5s161.6 again, a Mump of 5s4.5. “)oreigners are unloading their holdings in the T-bills prematurely due to the fear caused by the coronavirus, which has pushed up the demand for dollars in the interbank. Once that subsides, the situation will ease,” said )ore[ Association of Pakistan President Malik %ostan.
In addition, the emergency rate cut by the State %ank of Pakistan on Mar 24 has further hastened foreign unloading in the treasury bills, which do not offer as high a return anymore, according to currency dealers. During this month, foreigners have divested over $1.5 billion from the T-bills, with outflows on Mar 25 alone standing at $71m. Meanwhile, the open market witnessed no change as the dollar held steady at 5s160 but that is largely because the e[change companies were mostly closed due the ongoing lockdown.
“Operations were not even 1pc of the original level with only a handful of branches open with little to no customers,” said %ostan. Due to this, e[change companies haven’t been able to supply cash to the interbank market, which has also put the rupee under strain, he added.
“The government is negotiating with multilateral parties for a $3.7bn coronavirus relief package. If done correctly, it is possible that Pakistan may have a soft landing once the crisis dies down and that’s a long way from now,” said (man .han, an analyst at Tresmark. Within the past two days, the dollar has gained 5s8, as compared to Wednesday’s opening value of 5s159, representing a rise of 5.03pc
After staying calm for almost half a year, the currency market started witnessing volatility from March 9 when rupee lost 5s3.65 in a single day.
Since then, the dollar has Mumped a cumulative 5s11.75 (or 8.3pc) to 5s167 as of today’s close.