The US dollar edged lower by Re1 on Friday to close at Rs166 in the interbank market compared to the opening value of Rs167, according to rates provided by the Exchange Companies Association of Pakistan (ECAP).
However, the rupee's slight recovery came after a busy day with the dollar touching the intraday high of Rs169.5 — a record level for the greenback — before going back to around Rs165 in the first half as the State Bank of Pakistan reportedly injected its own liquidity to support the local currency.
“The SBP reportedly intervened today as the dollar came close to the psychological level of Rs170. Highest traded was 169.50 and after intervention, it went down to 164.75, closing the first session at 165.50,” said analyst Eman Khan of Tresmark.
She added that “pressure due to divestment of hot money was less today. Going forward, we see outflows slowing down significantly and the greenback trading in the Rs162-165 range.”
Hot money outflows which have crossed the $1.5 billion mark during the ongoing month stood at $21.5 million on March 26 (reported with a day’s lag), compared to the previous amount of $71m.
The magnitude of the SBP’s investment is, however, unknown. “To make the effect of this size, it may have injected around $150m or less,” commented Khan, giving the disclaimer that it was still a guess.
A similar version was offered by Zafar Paracha, former general secretary of the ECAP, who said that the SBP stepped in when the dollar approached Rs170 and brought it down to over Rs164.
According to Paracha, the SBP’s ready counter showed the dollar trading at Rs165.5, down 60 paisas from yesterday's value of Rs166.1.