Rupee gives up gains amid importer dollar demand

KARACHI: The rupee ended weaker on Friday as dollar demand from importers eroded the currency’s previous session’s gains.

The rupee closed at 279.97 against the dollar in the interbank market, compared with Thursday’s close of 279.82. The rupee also declined in the open market, trading at 281.47 per dollar, down from 281.3 in the previous session. Dealers said that the local currency fell once again as demand for dollars from importers exceeded the dollar sales from exporters. In addition, remittance inflows were inadequate to meet the market requirement for the US currency.

Data from the State Bank of Pakistan showed on Thursday that its foreign exchange reserves increased by $27 million to $11.25 billion in the week ending February 28.

However, the total liquid foreign reserves held by the country dropped by $52 million to $15.874 billion. The reserves of commercial banks also decreased by $79 million to $4.624 billion.

The SBP’s reserves remain stable due to an increase in remittances and the central bank’s purchases of dollars from the local currency market. However, external debt repayments and a negative current account balance may put pressure on these reserves.