Rupee continues downward slide

KARACHI: The rupee extended losses to a sixth consecutive session on Friday amid a negative sentiment about the country’s economic outlook, while an appreciation of the US dollar against other major currencies also weighed on the local unit.

In the interbank market, the rupee fell 0.22 percent to close at 223.17 per dollar, from Thursday’s close of 222.67 per dollar.

The domestic currency weakened 45 paisas to end at 229.95 against the dollar in the open market.

An uptick in the foreign exchange reserves didn’t help improve investor sentiment. The country’s foreign exchange reserves increased by $75 million to $13.796 billion during the week ended November 11.

Dealers said there were concerns about a bleak outlook for the economy. In October, the trade deficit decreased by 40 percent to $2.32 billion, thanks to a drop in imports, but a significant fall in exports is not encouraging for the country’s economy, which is struggling with its balance of payments.

“The demand for the US currency is higher than supply. The US interest rates are higher than before, which is pushing the USD higher against the PKR,” said Samiullah Tariq, head of research at Pak-Kuwait Investment Company.

Textile exports fell by 11.1 percent month-on-month to $1.36 billion in October, which is the lowest number since May 2021. The effect of a global economic slowdown and high inventory levels held by retailers is now becoming more visible, according to analysts.

Pakistan and the International Monetary Fund are yet to agree on a schedule for formal discussions on the overdue ninth review of a $7 billion loan programme due to a lack of clarity on the financial requirements for the current fiscal year related to floods.

A substantial increase in the country's default risk and continuous political uncertainty also dampened investor sentiment.