Rupee hits nine-month low at 162 in inter-bank
Pakistani currency depreciated around Rs3 against the US dollar to a nine-month low at Rs162 in intra-day trade in the inter-bank market on Wednesday.
The rupee surpassed the crucial threshold mark of Rs160 for the first time in the past nine months on Wednesday.
However, the rupee had closed at Rs159 on Tuesday, according to the State Bank of Pakistan (SBP).
Since the Monetary Policy Committee meeting on March 17, interest rates have been cut by a total of 225 bps over two rounds.
“As the interest rates were cut, investors, especially foreigners, offloaded their holdings in the market treasury bills to seek the safety of dollars — a safe haven. This increased the demand for the greenback in the market,” said Zafar Paracha, former secretary general of Exchange Companies Association of Pakistan.
After staying calm for almost half a year, the currency market started witnessing volatility from March 10 when it fell by Rs3.65 in a single day.
Over the past two weeks, the dollar has jumped by Rs8.25 (or 5.35pc) to Rs162.5, compared to Rs154.25.
Meanwhile, no dealing was done in the open market in light of the lockdown. However, a day ago, the dollar was being traded at Rs160 at exchange companies even though operations were quite limited.
Similarly, Pakistani currency shed over 3% to Rs159 for one month till yesterday.
Including Wednesday’s drop, the rupee has depreciated a cumulative 5% to Rs162 in intraday trade.
The coronavirus pandemic has kept uncertainty on economies around the world, including Pakistan, Tariq said.
He said the US dollar is getting strengthened globally. This has impacted the currencies of many emerging and poor economies in the world.
The Mexican currency (peso) has weakened over 20% against the US dollar in the past one month till yesterday.