Rupee inches down on importer dollar demand

KARACHI: The rupee inched downward on Monday due to importer dollar demand ahead of a long weekend amid the Eidul Fitr festival this week.

The rupee closed at 277.94 per dollar, compared with Friday’s close of 277.92.However, the rupee posted minor gains in the open market. It was trading at 279.58 against the dollar for selling, up from 279.65 in the previous session.

“To meet their needs before the holidays begin, importers and businesses stepped in by purchasing dollars,” a currency dealer said.“This demand offset inflows in the form of remittances and export proceeds,” the dealer added.

Markets will be closed from Wednesday to Friday for public holidays on account of Eidul Fitr.Analysts said that positive developments concerning Reko Diq and upbeat remarks about the International Monetary Fund program will boost investor sentiment and support the local currency."The Prime Minister and his delegation are currently in Saudi Arabia, engaging with counterparts and discussing investment treaties. At the forefront of these discussions is the Reko Diq project, which holds significant importance," said Chase Securities in a note.

“There are high hopes for Saudi investment in the mining sector, particularly concerning this project. Additionally, the free trade agreement draft has been shared with the Gulf Cooperation Council, with the signing of the FTA seen as a crucial step for the Reko Diq deal to progress,” it said.

"However, amidst these developments, concerns arise due to the volatility in oil prices, with Brent hovering around $90 per barrel due to tensions in the Middle East. This external factor is a subject of deliberation in monetary policy meetings, potentially impacting decisions regarding the policy rate."