KARACHI: The ex­cha­nge rate witnessed some fluctuation during the first day of the week but it remained in favour of the dollar which closed with the 60-paisa gain in the interbank market.

The market saw the dollar reaching as high as Rs167.50 in intraday trade before closing at Rs166.14, compared to Friday’s value of Rs165.54.

Currency dealers said the State Bank of Pakistan has strong controls that prevent the market from crossing the untold and unseen red line.

Since the breakout of the pandemic, the exchange rate has experienced high volatility with dollar going as high as Rs169.50 but the SBP’s intervention provided some support to the rupee.

The local currency became weaker as the dollars outflow from the country suddenly increased as foreigners started liquidating their positions in both the domestic bonds and equity markets.

During this month, foreigners have unloaded $1.67 million from the treasury bills, as opposed to their peak inflow of $3.4 billion in this fiscal year. On March 27 alone (last available data), their outflow amounted to $74.65m.

Last week, the dollar gained Rs6.87 against the local currency and has started off this week on a high as well.

Neither the banks nor the currency experts were in position to identify any point of stability for the exchange rate. There was no hope that exports could support the country to improve the decelerating foreign exchange reserves.

The government is asking exporters to send the relevant ministry details about the cancellation of exports order and no such data is available that quantifies its volume or value.

However, exporters have been telling the government about cancellation of orders in large numbers.

The lockdown has already caused serious economic damage as manufacturing across many industrial plants remains shut, which will further drag down the output for exports.

Bankers said the real impact of export decline would be felt in the last quarter of this fiscal year. The government is trying to manage the expected shortfall in the foreign exchange reserves by borrowing about $4 billion mostly from multilateral lending institutions.

On the other hand, activity in the open market remained muted with the greenback registering a gain of Re1 to close at Rs166 as most of the exchange companies were closed due to the ongoing lockdown.

Published in Dawn, March 31st, 2020