Inter-bank market: Rupee falls further against dollar

Global economy tumbling due to the coronavirus outbreak, Pakistan is also feeling the impact

KARACHI: The rupee depreciated by around 1.12% or Rs1.75 in the inter-bank market on Tuesday and closed at Rs158.25.

According to forex.pk, the rupee stood at Rs156.5 on Monday. The latest drop brings the two-day fall in the rupee value to 2.3% as it had been at Rs154.7 on Friday.

"The rupee has been volatile since Monday as foreigners have begun pulling out their investments from govt securities in Pakistan," remarked Forex Association of Pakistan President Malik Bostan while talking to The Express Tribune.

"In addition to this, rumours are doing rounds in the market that the State Bank of Pakistan will slash the key policy rate next week, hence, investors have started pulling out their money."

He pointed out that three-month treasury bills had started maturing and hence Pakistan had begun payments to the holders of those securities.

Coronavirus challenge and Pakistan’s exports

Moreover, he added that the global economy was tumbling due to the coronavirus and hence Pakistan was also feeling the impact.

The association president pointed out that all rupee selling was being witnessed in the inter-bank market and there was virtually no selling in the open market.

Bostan voiced hope that the fluctuation in the rupee value would end soon and the rupee would return to its previous level as foreigners were expected to invest further in Pakistan after economic conditions stabilised.

Echoing his remarks, Topline Securities Director Research Syed Atif Zafar said the fall in the rupee value was due to divestment of hot foreign money injected into T-bills.

"There has been a constant outflow for the past six weeks and hence it is being reflected in the rupee value," he said. 

Published in The Express Tribune, March 11^th, 2020.

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