The US dollar continues to rise after Eid holidays, reaching an intraday high of Rs163.5 in the interbank market on Friday, its highest level in more than a month.
The greenback surged by Rs2.6 in two trading sessions since markets opened for the first time after a week-long Eid break.
The last time the dollar traded at this level was on April 20. The open market or cash market followed a similar trend where the dollar rose Rs1.2 during the day and reached a high of Rs163.
In March, the dollar remained volatile, rising to an all-time high of Rs169 on March 27 before a central bank intervention brought it down to Rs167 the same day. That sudden rise (a jump Rs10 in a matter of days) was primarily caused by an outflow of hot money that was parked in the country’s treasury bills.
As foreign investors took the money out, it put pressure on our dollar reserves and exchange rates.
However, the country soon received money from the IMF and other financial institutions as part of emergency support to fight the impact of COVID-19, which stabilised our reserves. The dollar has been falling since then, hitting Rs158 on May 4. Barring today’s high, it has traded between Rs160 and 161 during May.
As of May, Pakistan had more than $12 billion in its reserves, enough to pay for three months of imports.