KARACHI: Only a day after gaining some of the lost ground, the rupee resumed its slide against the dollar as it fell by Rs1.80 to reach Rs158.6 in the interbank market on Monday.
In the open market, the local currency recovered by Rs2 to stand at Rs156.5, as opposed to the Friday’s closing of Rs158.5.
Since the beginning of the last week, the rupee began its downward journey against the greenback as it reached Rs159.3 by Thursday, compared to Monday’s opening value of Rs154.25 - representing a fall of Rs5.05 or 3.27 per cent.
However, the final day of the week recorded a sharp recovery of Rs2.6 to finally close at Rs156.7.
Forex Association of Pakistan President Malik Bostan attributed the increase in rupee’s value to lack of demand for dollars among the foreigners, who he said didn’t book any forward rates as they turned to the sidelines due to the weekend.
Speaking of today’s movement, he explained: “As foreigners were allowed to liquidate even the unmatured positions in treasury bills, that has put pressure back on the dollar,” adding, “however, the greenback outflows are from the interbank supply, not that of the State Bank of Pakistan (SBP) reserves and thus should be a temporary phenomenon.
The volatility in the currency market has also been in line with the global meltdown in the global markets as the Pakistan Stock Exchange was also battered on Monday, losing record-high 2,349 points.
“The increase in dollar is primarily linked to the performance of stocks on Monday,” commented Exchange Commission of Pakistan former general secretary Zafar Paracha.
He added: “expectations of a rate by the SBP monetary policy statement have further expedited outflows in the treasury bills [which stand at $606 million net in March], raising the demand for the greenback and thus putting pressure on the exchange rate.”
“There is still a reasonable supply of dollars, especially hard currency, as even the exchange companies are depositing their holdings in the interbank market. But if the flight operations are curtailed further, that could affect supply,” Paracha continues.
Gold loses shine
One tola and 10-gram gold prices plunged to Rs89,000 and Rs76,303 respectively, showing a fall of Rs1,850 and Rs1,587 on the back of $60 per ounce fall in world gold prices to $1,470.
Gold prices jumped in early trade on Monday after another emergency rate cut by the US Federal Reserve, before paring gains as some investors sold the metal for cash amid a sell-off in equities, said a note released by the BIPL research on Monday.
Spot gold was up 0.9 per cent at $1,543.60 per ounce by 0248 GMT, having risen as much as 2.8pc earlier. The metal fell 3pc on Friday. The US gold futures rose 1.8pc to $1,544.20 per ounce.
Published in Dawn, March 17th, 2020