Rupee weakens on dollar demand

KARACHI: The rupee ended marginally weaker on Monday due to an uptick in dollar demand from importers, dealers said.

The rupee closed at 278.37 to the US dollar, compared with Friday’s close of 278.20 in the interbank market. It dropped by 0.06 per cent during the session.

The rupee lost nine paisas in the open market, settling at 280.15 against the dollar. The rupee had ended at 280.06 in the previous session.

Dealers claimed that slow inflows from exporter dollar sales and remittances, combined with importers’ dollar demand, put pressure on the local unit.

“The rupee declines due to the seasonal increase in imports and other payments, which coincides with an increase in demand for US dollars in June,” a currency dealer said.

The State Bank of Pakistan reduced its key interest rate by 150 basis points to 20.5 per cent in line with market expectations.

The rupee is anticipated to be range-bound until the budget is finalized as investors await key taxation reforms.

The SBP, in its monetary policy statement, said that the resultant lower current account deficit, along with improved foreign direct investment and the disbursement of the IMF’s tranche in April, has facilitated ongoing large debt repayments and supported the SBP’s foreign exchange reserves.

“Going forward, the committee stressed that timely mobilization of financial inflows is essential to meet the external financing requirements and further strengthen FX buffers for the country to effectively respond to any external shocks and support sustainable economic growth,” it said.