Rupee falls to 277.85 per dollar in interbank market

KARACHI: The Pakistani rupee extended losses for the fourth straight session against the US dollar in the interbank market on Thursday.

The rupee closed at 277.85 versus the dollar, compared with Wednesday’s close of 277.79.

The rupee fell versus the US dollar in the open market, tracking the interbank rupee depreciation. The local unit was trading at 278.78 per dollar, down from 278.72 in the previous session.

According to dealers, the local unit continued to lose ground because of inadequate supplies as dollar demand from importers businesses and companies surpassed exporter conversions and remittance inflows. Furthermore, exporters were reluctant to engage in forward dollar selling ahead of a monetary policy meeting next week.

The State Bank of Pakistan is expected to cut its benchmark interest rates for a fourth consecutive meeting on November 4. Markets and economists anticipate a 200bps reduction in the policy rate due to persistent ease in inflation pressures.

Treasury yields continue to decline, with the cutoff yields for three-month to one-year treasury bills dropping by 64-140bps, said Chase Securities in a note.

“The one-year Treasury bill’s cutoff yield now stands at 13.1 per cent and is anticipated to decline further in the secondary market, following the government’s issuance of Rs820 billion against Rs2.2 trillion in participation,” it said.

“With the CPI [consumer price index] figures expected tomorrow (Friday) and the monetary policy announcement on Monday, optimism about the potential decline in interest rates is set to persist,” it added.