Rupee declines against dollar

KARACHI: The rupee weakened further against the dollar in the interbank market on Thursday. It closed at 278.86 per dollar, down from 278.77 in the previous session.

Dealers said that the local currency declined for the fourth consecutive session as the demand for dollars from importers exceeded the supply from exporters.In the open market, the rupee also experienced a drop, selling at 280.94 against the dollar, compared with 280.67 in the previous session.

As the rupee continues to decline, traders are keeping an eye on whether it will surpass the 278 mark before the central bank’s monetary policy meeting scheduled for January 27. In the latest auction of Pakistan Investment Bonds (PIBs) held on Wednesday, thegovernment successfully raised Rs384 billion, with yields declining by 19 to 61 basis points (bps).“The current medium-term PIB yields suggest that market participants anticipate a shift in interest rates towards single-digit territory,” said Chase Securities in a note.

“The continued decline in medium- and long-term bond yields indicates rising market expectations for substantial rate cuts in upcoming monetary policy announcements,” it added.Last month, the State Bank of Pakistan (SBP) lowered its key interest rate by 200bps to 13 per cent. This marks the fifth consecutive rate cut since June, bringing the total reductions for 2024 to 900bps.