Rupee recoups some losses in open market

KARACHI: The rupee gained ground in the open market on Tuesday as demand for the dollar fell following a rise in supply, dealers said. The local unit closed at 303 per dollar, up 5 rupees from Monday’s rate of 308, according to the Exchange Companies Association of Pakistan (ECAP).

“The kerb market saw a decline in the demand for dollars. People sold dollars in expectation of the rupee’s continued rise, which increased supplies and helped the rupee gain upward momentum versus the dollar,” said Zafar Paracha, secretary general of ECAP.

“We foresee a steady currency market. Because it is unclear what will be announced in the upcoming budget, which is due on Friday, the rupee should trade range-bound until then,” Paracha added. In the interbank market, the rupee weakened for a third straight session, ending at 286.56 to the dollar, 0.13 percent weaker than the previous close of 286.19. Dealers said the currency had lost ground in the official market due to an increased demand for the dollars from importers and lower inflows.

Though discussions between the International Monetary Fund (IMF) and the ministry of Finance are underway regarding the budget targets, investors remained concerned about the fate of the stalled $6.5 billion bailout programme. The IMF has acknowledged that Pakistan has shared the federal budget numbers for the fiscal year 2023-2024.

“The negotiations between the IMF and the government are progressing slowly, and there are concerns that the programme may expire within the next three weeks unless there is provision for an extension,” said Chase Securities in a note.