Rupee falls

KARACHI: The rupee fell to 177.89 to the dollar on Monday, its sixth consecutive all-time low, amid reluctance of the central bank to intervene in the foreign exchange market to ease the pace of decline, traders said.

The rupee closed at 177.71 per dollar on Friday. In the open market, the rupee also closed to a record low of 180.5 to the dollar, compared with the previous close of 179.90.

Dealers said a continual surge in the dollar demand for import payments weighed on the local unit. Inflows, which were available in the market, were not sufficient to cover the demand side.

“There was a mismatch between the demand and the supply of the greenback. The State Bank of Pakistan refrained from intervening in the market to lend support to the currency,” said a forex trader. Traders are now awaiting the State Bank of Pakistan Monetary Policy Committee meeting due on December 14 (Tuesday).

It is expected that the SBP would raise its benchmark interest rate by 100 basis points to 9.75 percent due to heightened risks stemming from inflation and the balance of payments. Risks related to inflation have heightened and more importantly price pressures look long lasting, according to a report from Alfalah Securities.

“Note that withdrawal of tax exemptions in the mini-budget (soon to be announced) are going to further hike retail prices. The SBP now sees risks to both its consumer price index inflation (7-9 percent) and current account deficit (2-3 percent of GDP) forecasts and it will most likely release its revised numbers in the upcoming monetary policy meeting,” it said.