The rupee lost Rs3.5 to reach Rs162.5 against the dollar in the interbank market on Wednesday as various parts of the country observed varying degrees of a lockdown.

In terms of percentage, the dollar rose by 2.22 per cent over the previous day’s closing value of Rs159.

The rise in dollar came only a day after the State Bank of Pakistan, in an emergency meeting, slashed its key rate by another 150 basis points in the wake of rising coronavirus cases and business disruptions caused.

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.