Rupee edges up in interbank, slips in open market

KARACHI: The rupee strengthened slightly against the US dollar in the interbank market on Thursday, as importers' demand for the greenback remained subdued and the country's economic outlook improved.

The rupee closed at 281.67 per dollar, up 0.02 percent from its previous close of 281.72. However, the rupee weakened by 0.04 percent in the open market, where it was quoted at 282.53 per dollar, compared with 282.42 on Wednesday.

Analysts said the interbank market is relatively stable, as the importers' demand is low and the exporters are selling dollars. The open market is more volatile, as there is more speculation and arbitrage. The rupee also drew support from some positive economic indicators, such as a narrowing trade deficit and an expected inflow of funds from the International Monetary Fund (IMF).

Pakistan's trade deficit shrank by 34.29 percent to $11.148 billion in the first half of the current fiscal year (July-December), as exports rose by 5.17 percent to $14.981 billion and imports fell by 16.28 percent to $26.129 billion. The IMF is expected to release the second tranche of about $700 million from its $3 billion loan programme for Pakistan, as its executive board will meet on January 11 to approve the country's progress on economic reforms. The IMF's approval will also pave the way for Pakistan to receive funds from other multilateral lenders, such as the World Bank and the Asian Development Bank, which are linked to the IMF programme.