Rupee continues downward slide

KARACHI: The local currency dropped by one rupee to 238 against the dollar in the kerb market, following a decline in the value of the rupee in the interbank market.

However, dealers expect a slight recovery in the rupee on the back of renewed optimism about the IMF loan programme and Saudi Arabia's aid commitments. The rupee was trading at 237 versus the greenback on Tuesday.

“The open market also sees a decline in the rupee as it does in the interbank market. The public has a desire for dollars, but there is a lack of US currency, which limits our ability to meet that demand,” said Zafar Paracha, the secretary general of the Exchange Companies Association of Pakistan. In the interbank market, the rupee closed at 227.93 per dollar, compared with the previous close of 227.88.

“As the government has demonstrated its commitment to meeting the IMF requirements for the completion of the ninth review required for the release of the next tranche of funds to Pakistan, we expect that pressure on the rupee will lessen in the near term,” Paracha said.

Additionally, there is some relief coming from Saudi Arabia, where the pledges of deposits to the State Bank of Pakistan have grown by $2 billion to $5 billion. This would help improve the country’s foreign exchange reserves and the currency as well, he added.