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Sunday May 19, 2024

Rupee weakens on import demand

According to dealers, the rupee lost strength in the interbank market as importers bought dollars to cover their payments

By Our Correspondent
March 02, 2024
A money trader counts Rs500 bank currency notes at a money exchanger. — AFP/File
A money trader counts Rs500 bank currency notes at a money exchanger. — AFP/File

KARACHI: The rupee ended weaker on Friday, hurt by dollar demand from importers and a drop in the foreign exchange reserves.

In the interbank market, the rupee closed at 279.19 per dollar, down from 279.11 on Thursday. It fell by 0.03 percent during the session. The rupee held steady in the open market. It was trading at 282.03 against the dollar, compared with 282.04 in the previous session.

According to dealers, the rupee lost strength in the interbank market as importers bought dollars to cover their payments, while remittances and exporter inflows were insufficient to meet the demand from importers. In addition, the decline in forex reserves also put pressure on the rupee. Pakistan’s foreign reserves held by the State Bank of Pakistan dropped by $63 million to $7.950 billion as of February 23, due to foreign debt repayments. Even though the SBP's reserves decreased in the previous week, they nevertheless improved significantly from $4.445 billion in June 2023.

The interbank and open market premium were reduced to less than 0.5 percent, according to the Ministry of Finance's monthly economic update and outlook for February. This is in contrast to the 1.25 percent range that the IMF had recommended. Dr Shamshad Akhtar, the acting finance minister, recommended in the economic update that the new government come to an agreement with the IMF for a new medium-term programme to carry out difficult reforms.