KARACHI: The greenback grew Rs5.85 mightier and traded at Rs167.45 interbank on Thursday.
The currency has gained a total of Rs8.45 over Pakistani rupee in the interbank in the last three days. It is being attributed to frequent reduction in interest rate accelerating the drain of foreign exchange reserves.
A day earlier, dollar had gained Rs3.5 to reach Rs162.5. The rupee had fallen 1.63 per cent or Rs2.60 around the closing.
According to traders, the sudden cut in policy rate had irked the investors who engaged into panic selling of their holdings. The situation of market indicates a further depreciation in the value of rupee soon.
State Bank of Pakistan (SBP) lowered policy rate by a cumulative 225 basis points to 11 per cent in two monetary policy announcements in a single week. The central bank resorted to rate cut in the hope to cope with the fallout following a lockdown amidst the COVID-19 pandemic.
The sale of T-bills stood at net worth of $95 million on March 24, according to the central bank, bringing the total divestment in March 2020 to $1.501 billion.
Exchange sources have also reported that investors are changing their holdings into dollars which is likely to bring the rupee further down in coming days. The State Bank of Pakistan said that it is monitoring the situation closely and has assured to intervene if needed.
“If the SBP is intervening in the PKR-USD market by selling dollars, then its FX reserves would fall,” said Zeeshan Azhar, an analyst at Foundation Securities.
Dealers said the rupee came under severe pressure against the US currency after significant outflows of capital from the stock market and government bonds.
“The central bank didn’t intervene in the foreign exchange market to address liquidity or excessive market moves in the local currency,” a forex dealer, who declined to be named, told The News.
The COVID-19 induced economic trauma is likely to prevail and badly influence the balance of payments according to market analysts. Visible decline in remittances and exports volumes will strike the current account deficit. However, slump in oil prices may lead to sizeable reduction in import bills.