The United States dollar continued its gains against the rupee on Wednesday in the intraday trade as it rose by a further Rs0.8 to reach Rs158.6 by 4:26pm in the interbank market.
In percentage terms, this showed an increase of 0.51 per cent over Rs157.8 at the day’s beginning.
After staying steady for around six months, the greenback began rising on Monday and posted a sharp jump of Rs3.65 (or 2.36pc) to reach Rs157.9 by the day’s end.
The open market also noticed an upward movement as the dollar rose by Re1 to Rs158 during intraday trade today.
Much of this change can be attributed to foreigners unloading their positions in the equity and debt markets.
“International investors have been selling their stakes in the stock exchange, which has created demand for dollars. The T-bills, which attracted hot money inflows, are also set to mature in less than a week,” said former general secretary of Exchange Companies of Pakistan, Zafar Paracha.
“The rupee shouldn’t have lost value as the dollar itself has declined against the euro but the coronavirus outbreak has induced part panic, part speculation among investors,” he added.
Forex Association of Pakistan President Malik Bostan put weight behind this explanation and said: “With the maturity of government papers just around the corner, many foreigners are liquidating their positions instead of reinvesting, which has created demand for dollars in the interbank market.”
Recent remittance published by the State Bank of Pakistan on Tuesday showed an increase of 5pc during the first eight months of this fiscal year. Combined with that, the SBP reserves have continued to rise while exports also posted growth as per the last figures, suggesting that fundamentals regarding the external account have witnessed no change.