KARACHI: The rupee closed weaker against the dollar in the interbank market on Friday. The rupee ended at 278.75 per dollar, compared with the previous close of 278.72.
The rupee also declined, trading at 281.21 against the dollar in the open market, compared with 281.13 on Thursday. Dealers said the local unit posted slight losses due to dollar demand for import payments. In addition, the decrease in the foreign exchange reserves also hit investor sentiment.
Pakistan’s foreign exchange reserves held by the central bank dropped by $276 million to $11.449 billion as of January 17. The SBP attributed the decrease to the repayment of external debt.
The country’s forex reserves fell by $262 million to $16.189 billion. However, commercial banks’ reserves increased by $15 million to $4.741 billion. Dealers indicated that market participants are watching the central bank’s upcoming monetary policy meeting on Monday for insights into the rupee’s future trajectory.
Investors and analysts expect a 100 basis points (bps) cut in rates this time due to falling inflation. In December, the SBP cut the policy rate by 200bps to 13 per cent, marking the fifth consecutive rate reduction since June. Investors also assess the US president’s call for reduced oil prices via heightened OPEC production and a focus on lowering interest rates in Pakistan’s economy.