Rupee breaches 280/dollar level as it continues to decline

KARACHI: The rupee continued to weaken in the interbank market, closing at 280.07 on Monday versus the dollar, down from 279.97 in the previous session. The rupee saw a decline in value in the open market as well, trading at 281.49 to the dollar from 281.42 the day before.

According to dealers, the rupee extended losses for the second straight session as pressure on the local currency increased due to dollar demand from importers. Banks have tightened their control over inflows and outflows, which has caused difficulty when opening letters of credit and delays in import payments.

In a major development, the State Bank of Pakistan (SBP) unexpectedly paused its monetary policy easing cycle, keeping interest rates at 12 per cent.The SBP said in a statement that some pressures on the external account have emerged due to rising imports amidst weak financial inflows. Led by a broad-based acceleration in imports, the current account turned into a deficit in January 2025, shrinking the cumulative surplus to $0.7 billion during July-January FY25,” it said.

“While import volumes have been rising consistently in line with the pickup in economic activity, the uptick in some global commodity prices further pushed up import payments in January. However, robust workers’ remittances, along with relatively moderate growth in exports, proved instrumental in financing the elevated imports,” it added.