Dollar Rises Against Rupee As Investment Falls
The US Dollar against the PK Rupee rose by Rs. 4.4, leading it to touch Rs. 166 in the interbank market. One reason is the outflow of hot money investment.
Yesterday, the value of the US Dollar against the Pakistani Rupee had reached Rs 161.6 – today, it rose further by Rs 4.4, leading the value to touch Rs 166, probably because of reduced investments.
One of the major reasons for the recent rise of the value of dollar against rupee in the interbank market is the outflow of hot money from investment. Seeing a recession coming on soon, many investors are uncertain about the future value of investments and taking out their money.
Originally, the value of dollar had stabled against the rupee at around Rs 155 because of the investment due to high interest rates. Now that the SBP had to cut it from 13.25% to 11%, many investors are checking whether the currency depreciation along with the fall in the interest rate are worth investing in Pakistan.
Because of the COVID-19, the foreigners started withdrawing their investments with the net outflow in T-bills on March 24 standing at $101,990. SBP’s latest data shows that outflow of investment from T-bills within the first 20 days of March rose to $1.614 billion, taking the net foreign holdings in government papers down to $1.461 billion from $3.4 billion.
The economic activity is already considered weak in Pakistan, and the fall in exports and trading activities has only made the investors further uncertain. People all over the world have already started to take money out of banks, as well as sell their hard assets such as gold, leading to prices falling. As the expectations of global recession are rising, investors are losing confidence in the economy.
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