Rupee recovers to 165.54

Recovery seen following intervention by central bank

KARACHI: Pakistan's central bank has apparently intervened to rescue the rupee as it partially recovered against the US dollar in intra-day trading in the inter-bank market on Friday.

Market talk suggested that the State Bank of Pakistan (SBP) has intervened, meaning it supplied dollars in the inter-bank market to fulfil the demand.

The local currency recovered Rs0.59 to Rs165.54 against the US dollar in the inter-bank market on Friday compared to Thursday's close of Rs166.13, SBP reported.

A source said that the rupee partially recovered ground against the greenback after exporters sold dollars at historic intra-day low level.

The currency had hit a record intra-day low of Rs168.50 during early hours of the last session of the week, according to market sources.

The central bank keeps its intervention operations secret. It never discloses publically regarding when and how much amount it injects.

The interventions, however, give a direction to the market regarding the rupee-dollar exchange rate.

SBP Governor Reza Baqir has stated several times in the recent past that the bank intervenes in the market when it finds it essential.

"Otherwise, market players (commercial banks) determine the rupee-dollar exchange rate depending upon the supply and demand situation of the foreign currency in the system," he said.

Earlier, the rupee depreciated by 7.46 (4.7%) in the past three days to Rs166.13 against the US dollar on Thursday.

It lost a total of Rs11.46 (or 7.43%) during the ongoing month of March till Friday.

The drop in the rupee was seen after a gap of eight months as foreigners heavily pulled out short-term investment in panic from the domestic debt and stock markets in the past three weeks. Foreigners were seen withdrawing such investment across the world to keep cash in hand during global lockdowns amid the coronavirus pandemic.

Pakistan's foreign currency reserves dropped $690 million to $11.98 billion during the week ended March 20, SBP said in its latest release on foreign exchange reserves on Thursday.

Published in The Express Tribune, March 28^th, 2020.

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