Rupee rises against dollar

KARACHI: The rupee slightly increased on Tuesday due to dollar sales from exporters and a decreased trade deficit.The rupee closed at 278.29 to the US dollar in the interbank market, slightly stronger than its previous close of 278.36.

In the open market, the rupee lost ground versus the dollar. It was trading at 279.59, compared with 279.54 on Monday.According to dealers, exporter conversions helped the rupee somewhat strengthen versus the dollar even though importers still had a demand for dollars.

“The improved trade deficit figures bolster Pakistan’s balance of payments positive outlook, which also supported the local unit,” a currency dealer said.According to analysts, investors are keeping an eye on budget-related news and are waiting for the State Bank of Pakistan to announce its monetary policy decision to get a hint as to where the rupee will go in the coming days.

"The PM begins his five-day visit to China on Tuesday, during which he will meet Chinese leaders to discuss diplomatic issues; the second phase of the China-Pakistan Economic Corridor (CPEC); and debt rollovers," said Chase Securities in a note.

"Although he is scheduled to return on Saturday, it is unlikely that the budget will be announced this Friday, and it may be deferred to early next week," it said.Headline inflation for May 2024 was reported at 11.8 per cent, significantly lower than expected.

“This lower-than-expected inflation has increased the likelihood of an interest rate cut, with an announcement expected next week,” it added.“Additionally, declining oil prices in international markets are expected to have a further positive impact on inflation. The trade deficit figures for May 2024 indicate that we might see another month of a current account surplus.”