Rupee gives up gains

KARACHI: The rupee closed weaker against the dollar on Wednesday, as an increased demand for dollars from importers and uncertainties surrounding politics and the economy prompted the local unit to surrender previous gains.

The rupee ended at 223.81 per dollar, compared with Tuesday’s close of 223.42 in the interbank market. It fell by 0.17 percent on day-on-day.

In the open market, the domestic currency finished at 231 to the dollar, unchanged from the previous close.

Dealers said importer dollar demand caused the local currency to lose the gains it had made in the previous session. Besides, the dollar supplies did not meet the market's needs.

The pressure on the rupee would persist, according to a foreign exchange trader.

“Until the economic and political worries ease, the pledged funding starts to materialise from the friendly countries and the talks with the International Monetary Fund on the ninth review of the loan facility resume,” he said.

Market participants look to the central bank's monetary policy decision for the future direction of the rupee. This week, the State Bank of Pakistan (SBP) will unveil its monetary policy decision.

Due to a slowdown in aggregate demand and a lower current account deficit, markets expect that the SBP will maintain the interest rates at their present level of 15 percent on Friday.

The SBP believes that the country’s external financing needs should be more than fully met in FY2023, aided by rollovers by bilateral official creditors, new lending from multilateral creditors, and a combination of bond issuances, foreign direct investment, and portfolio inflows, according to analysts.

The SBP’s forex reserves should assume the upward trajectories, which stand at $8 billion as of November 11.