Rupee closes higher against dollar

KARACHI: The rupee erased the previous session’s losses to end slightly stronger on Wednesday on soft dollar demand from importers, dealers said.

The rupee closed at 277.85 to the US dollar, slightly up from its previous close of 277.92 in the interbank market.Dealers said they observed a decline in dollar purchases from importers, but there was a plentiful supply of dollars because of remittances and export proceeds inflows.The local unit also gained ground in the open market. It was trading at 278.8 per dollar, compare with 278.83 on Tuesday.

Analysts expect the rupee to remain stable against the dollar in the near term, supported by healthy supplies due to a persistent rise in remittances. Remittances to Pakistan surged by 23.9 per cent year-on-year (YoY) to $3.1 billion in October. These inflows rose to $11.8 billion in the first four months of the current fiscal year, up 34.7 per cent from the same period last year. State Bank of Pakistan Governor Jameel Ahmad said last week that forex reserves are expected to reach $12 billion by the end of this month.

The improvement in foreign exchange reserves is attributed to a reduction in the current account deficit amid robust workers’ remittances, increased exports, and the receipt of the first tranche from the IMF’s Extended Fund Facility programme.

As of November 1, the SBP’s reserves stood at $11.17 billion -- enough to cover more than two months of imports. The SBP’s persistent dollar sales from the market also supported the reserves. The SBP purchased $1.3 billion from the interbank forex market in June and July to bolster reserves and repay external debt.