KARACHI: The local currency remained under pressure on Wednesday losing another 80 paisa, or 0.51 per cent, against the US dollar which traded at Rs158.60 in the interbank market. 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.

Cumulatively, the dollar has increased by Rs4.35, or 2.82pc, from its value of Rs154.25 on Friday.

The open market also noticed an upward movement as the dollar rose by Re1 to Rs158 during intraday trade.

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 have attracted hot money inflows worth $3.1 billion, 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.”

Published in Dawn, March 12th, 2020