KARACHI: The US dollar kept appreciating against the local currency for a third consecutive day reaching close to an all-time high seen in the middle of August 2020.

The currency dealers as well as the State Bank reported the closing rate of US dollar as Rs166.28 on Wednesday showing an increase of Rs1.08 per dollar. This was the highest increase in a single day this week.

Since May the dollar has been rapidly marching towards its peak of Rs168 attained in August 2020 after foreign investments including hot money invested in domestic bonds started flying back to their destinations amid pandemic impact that began from middle of March 2020.

However, the current situation is different from the previous episode because the foreign exchange reserves of the country are at the peak. The rising import bill played a key role. However, the fear of higher current account deficit in FY22 is also a strong force convincing the buyers to book more dollars for future imports.

The government on Wednesday raised Rs633.8 billion through the auction of market treasury bills while cut-off yield was dropped by one basis point for three months and 5bps for six months. Bids for 12-month were rejected.

It picked Rs409bn against bids of Rs1.5tr for 6-month at 7.44pc, a drop of 5bps. It raised Rs121.3bn for 3-month papers at 7.23pc besides raising Rs86.3bn as non-competitive bids.