Dollar gains Rs4.53 in interbank market

Dollar has gained Rs7.46 in the past three days as a back-to-back reduction in interest rates

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STAFF REPORT

ISLAMABAD

The greenback gained to record levels against the rupee on Thursday as it climbed a further Rs4.53 in the interbank market and was being traded at Rs166.13.

The dollar has gained Rs7.46 in the past three days as a back-to-back reduction in interest rates catalyses foreign capital flight from Pakistan’s debt market.

On Wednesday, SBP’s latest data had revealed that outflow of investment from T-bills in the first 20 days of March rose to $1.614 billion, which took the net foreign holdings in government papers down to $1.461bn from the peak of $3.4bn.

However on Tuesday, the dollar was being traded at Rs160 in the open market even though operations were quite limited.

“The situation will improve once the lockdown is eased and the threat of the virus is over,” said Malik Bostan. He said Pakistan would not lose more than the developed countries as their stakes are higher.

After staying calm for almost half a year, the currency market started witnessing volatility from March 9 when rupee lost Rs3.65 in a single day.

Since then, the dollar has jumped by a cumulative Rs11.75 (or 7.6pc) to Rs166 as of today afternoon, compared to Rs154.25.

Analysts said the COVID-19 turmoil is likely to hurt balance of payments in future. The expected decline in remittances and exports could put pressure on the current account deficit. However, drop in oil prices could lead to reduction in oil import bills.