Rupee up in interbank

By Our Correspondent
February 22, 2024

KARACHI: The rupee recouped the previous session’s losses to close marginally higher on Wednesday, supported by an ease in the two-week-long political uncertainty.

A foreign currency counts Pakistani rupee notes at a shop in Karachi, on March 2, 2023. — Online

The rupee closed at 279.49 to the dollar in the interbank market, up from 279.57 on Tuesday. In the open market, however, the rupee continued to fall against the greenback. It was trading at 282.44 per dollar for selling, compared with 282.32 in the previous session.

Dealers said the local unit managed to gain a little ground as the deal between two major political parties to form a coalition government was made at last. This supported the rupee. Analysts, however, said that the rupee's small decline in the previous session was caused by the January current account deficit and the increase in the real effective exchange rate (REER).

Pakistan posted a current account deficit of $269 million in January, compared with a surplus of $404 million in the previous month. The REER index increased to 101.7 as of January 2024 from 98.8 in December 2023. These two figures imply that to control the deficit and maintain the REER below 100 levels, currency adjustments might be required.