Rupee inches down

KARACHI: The rupee edged lower against the dollar in the interbank foreign exchange market on Thursday, escaping a major change on lower importer demand, dealers said.

The local unit ended at 225.43 per dollar, compared with Wednesday’s close of 225.40.

In the open market, the domestic currency closed flat at 234.50 to the dollar.

“The local currency did not see any significant changes because importer demand was stable,” a currency dealer said.

He claimed that administrative measures had

been used to artificially manage the rupee/dollar

parity, including restrictions on the opening of letters of credit, import bans, and curbs on dollar repatriation.

The real effective exchange rate (REER) declined to 98.8 in November from 100.2 in the previous month. However, dwindled foreign reserves and their effects on overall businesses are causing market anxiety.

The sentiment on the rupee won’t improve till inflows from friendly countries materialise, according to analysts.

In addition to fostering a grey market, a 10–12 percent difference between official and unofficial currency rates has had a negative impact on remittances from legitimate sources.

Analysts expect the State Bank of Pakistan to gradually relax administrative restrictions once the ninth review of the International Monetary Fund’s loan programme concludes and other inflows start to manifest.