Rupee inches down

KARACHI: The rupee on Friday edged lower against the dollar in the interbank market on weak dollar supplies, dealers said.

The local unit ended at 223.94 per dollar, compared with Thursday’s close of 223.92.

In the open market, the domestic currency closed unchanged for a fourth straight day. It settled at 231 to the dollar.

Dealers said a mismatch between the demand and supply of dollars in the market and dwindling foreign currency reserves kept the local currency under pressure.

The country’s foreign exchange reserves fell by $151 million to $13.645 billion in the week ended November 18 on the back of foreign debt repayments.

In a surprise move, the State Bank of Pakistan (SBP) raised the policy rate by 100 basis points to 16 percent in the wake of surging inflation.

“Since the SBP's fresh monetary policy statement notes that external account challenges persist despite a significant moderation in the current account deficit in October and new funding from the Asian Development Bank, it appears that the pressure on the currency forced the SBP to raise interest rates,” said an analyst.

The current account deficit continued to moderate during both September and October, reaching $0.4 and $0.6 billion, respectively, according to the central bank.