Rupee extends gains in open market

KARACHI: The rupee extended gains to a second straight session on Wednesday in the open market amid an ease in dollar demand, traders said. The domestic currency rose by 3 rupees to close at 300 per dollar, according to the rates provided by the Exchange Companies Association of Pakistan (ECAP). The rupee had finished at 303 to the dollar on Tuesday.

“The demand for dollars decreased in the open market. People sold dollars in anticipation of the rupee's sustained appreciation, increasing supply and helping the rupee's rise against the dollar,” said a dealer. In the interbank market however, the local unit weakened for a fourth straight session on the back of dollar purchases for import payments, with concerns over Pakistan’s current account balance hurting investor sentiment.

The rupee ended at 286.88 per dollar, 0.11 percent down from the previous close of 286.56. Dealers said because June was typically a month with high government-related outflows, especially the defense imports payments the currency lost ground in June. Moreover, the data for the trade gap in May also worried the investors. Trade deficit numbers of $2.1 billion for May, are higher than the projected of $1.8 billion. The variance may be small, but it could throw the current account in deficit rather than surplus, according to dealers.