Rupee remains flat versus dollar

KARACHI: The Pakistani rupee stayed flat against the US dollar in the interbank market on Thursday. The rupee closed at 279.46 per dollar, unchanged from the previous close.

However, the rupee rose slightly in the open market. It traded at 281.08 versus the dollar, compared with 281.12 the day before. Dealers said the local currency remained stable during the session due to matching demand and supply of dollars in the market. However, dealers feared that growing imports could put pressure on the rupee in the near term.

The trend of current account surpluses ended in January, with a deficit of $420 million following three consecutive months of surpluses. This unexpected deficit is attributed to increased import payments.

In January, Pakistan’s real effective exchange rate (REER), which measures the competitiveness of the local currency against its trading partners, rose to 104, up from 103.7 in the previous month.

Analysts suggest that the rise in REER indicates that the rupee is slightly overvalued. This shift also signifies that the local currency has strengthened against a basket of its trading partners, making imports cheaper while reducing the competitiveness of exports in the market.