Rupee weakens on rising dollar demand

KARACHI: The rupee ended slightly weaker on Wednesday due to an uptick in importers’ demand for dollars and pressure from rising global oil prices, dealers said. In the interbank market, the rupee closed at 277.91 to the US dollar, compared with 277.84 on Tuesday. However, the rupee rose in the open market. It was trading at 279.98 per dollar, up from 280.04 in the previous session.

“The supply of dollars from export proceeds and remittances was insufficient to fulfill the demand for dollars from importers that existed today, said a foreign exchange trader. The local unit was also impacted by an increase in oil prices. Given that a sizable portion of Pakistan's oil needs are imported, an increase in oil prices has a direct impact on the nation's economy and currency. A rise in the price of oil causes the current account deficit to widen.

Pakistan’s imports increased by 25.86 percent year-on-year to $4.726 billion in March, according to the data from the Pakistan Bureau of Statistics.

While OPEC+ ministers decided not to alter the current output curbs during their meeting, investors continued to weigh supply risks related to Ukraine's attacks on Russian refineries and the possibility of escalation in the Middle East conflict, which led to oil prices continuing their upward trend. Brent crude futures for June increased 75 cents, or 0.84 percent, to $89.67 per barrel.