Rupee drops on import demand

KARACHI: The rupee ended marginally weaker on Wednesday due to strong demand for the dollar after the one-day holiday, dealers said. The rupee fell 10 paisas, or 0.04 percent, to close at 278.40 against the dollar in the interbank market.

The markets were closed on Tuesday for ‘Youm-e-Takbeer’, which celebrates May 28, 1998, the day Pakistan successfully conducted nuclear tests in the Chagai Hills.

“There was import (dollar) demand as businesses and importers rushed in to buy dollars to make their payments,” a currency dealer said. “As the supply and demand of dollar varies, we anticipate that the rupee will remain range-bound for the upcoming sessions.”

According to the dealer, the rupee comes under pressure when demand for dollars increases and supply decreases because banks manage their payments (outflows) from their corresponding inflows.The rupee stayed almost flat against the US in the open market. The currency traded at 279.47 per dollar, slightly up from 279.48 during the previous trading session.

Traders and analysts are closely tracking news flow about the IMF and the budget for the next fiscal year.“Typically, ahead of finalizing a new IMF programme, diplomatic relations are being strengthened with government teams visiting the UAE and China, and inviting Qatar to visit the country,” said Chase Securities in a note.

“Additionally, there have been visits to Saudi Arabia. These countries are essential for securing debt rollovers and maintaining safe deposit commitments before initiating the new IMF programme,” it said.