Rupee inches down against dollar

KARACHI: The rupee ended slightly lower on Monday due to the dollar demand from importers and weak supplies, dealers said.

In the interbank market, the rupee closed at 278.33 to the US dollar, compared with Friday’s close of 278.30.The rupee also lost ground in the open market. It fell 20 paisas to settle at 279.80 versus the dollar. The rupee had finished at 279.60 in the previous session.

Dealers stated that the currency somewhat declined because the US dollar's demand from importers and companies tends to rise at the beginning of each week“Due to a lack of export revenue and remittances, importers had to purchase dollars in order to make their payments,” a currency dealer said.

The State Bank of Pakistan on Monday reported that the real effective exchange rate(REER) increased to 104.1 in March from 102.1 in the previous month. Analysts expect the rupee is expected to trade in a narrow range over the coming week helped by stable foreign exchange reserves and optimism regarding the International Monetary Fund’s new loan programme.

Pakistan has made a formal request to the IMF for obtaining a fresh bailout in the range of $6 to $8 billion under the Extended Fund Facility to fix its economy. According to Finance Minister Muhammad Aurangzeb, Pakistan aims to finalise the details of a new IMF programme by May.

The Real Effective Exchange Rate (REER) of Pakistan's currency, a gauge of the value of a currency against a weighted average of several foreign currencies, rose to 104.07 in March 2024, up from 102.1 in February 2024, according to data released by the State Bank of Pakistan (SBP) on Monday.

This marks the highest level for the REER, surpassing its previous peak of 104.2 in April 2021, the SBP data showed.A REER below 100 indicates that the country’s exports are competitive, while imports are expensive. The situation reverses when REER stands above 100 on the index.

The REER increased 1.94 percent month-on-month in March 2024, the SBP said. Compared with March 2023, when it stood at 85.6, the REER value has surged 21.57 percent.Meanwhile, the Nominal Effective Exchange Rate Index (NEER) saw a slight increase of 0.18 percent month-on-month in March 2024, reaching a provisional value of 38.86 from 38.79 in February 2024. On a yearly basis, the NEER index rose by 3.43 percent from the value of 37.57 in March 2023.