Gold hit a new all-time high at Rs222,700 per tola (11.66 grams) on Wednesday despite Pakistani rupee being largely stable at Rs284 against the US dollar in the inter-bank market.
In another development, the cash-strapped government raised Rs706 billion in new debt through the sale of three to 12-month T-bills to commercial banks at the historic high return of 22%.
Market talk suggested that investors continued to purchase gold to avoid the impact of further rupee devaluation after the revival of IMF loan programme.
The rupee, however, remained largely stable as the import bill shrank to less than $3 billion in April compared to the all-time high of around $8 billion hit earlier.
The drop in imports came via forced measures in order to manage the critically low foreign exchange reserves of $4.46 billion and mitigate the risk of debt default.
The government borrowed Rs 706 billion in T-bills auction against the target of Rs 750 billion.
Had it acquired more financing from commercial banks, the return (cut-off yield) would have gone up to a new historic high. Banks offered Rs1.19 trillion in financing to the government.
Most of the funds were acquired by auctioning three-month T-bills, as the government raised a debt of Rs651.24 billion.
Published in The Logical Baat, May 4th, 2023.