Rupee falls on strong dollar demand from importers

KARACHI: The rupee maintained its downward trend for the third consecutive session in the interbank market on Friday, pressured by increased dollar demand from importers.

The rupee closed at 280.22 per dollar, compared with the previous close of 280.05. The rupee also fell in value in the open market. It was trading at 281.86 against the dollar, down from 281.62 the day before.

“Dollar buying from importers and companies to meet their obligations, along with a decline in the central bank’s foreign exchange reserves, kept the rupee under pressure,” a currency dealer said.

The forex reserves held by the State Bank of Pakistan (SBP) decreased by $152 million to $11.098 billion during the week ended March 7 due to external debt repayments. However, the total liquid foreign reserves held by the country increased by $55 million to $15.929 billion. The reserves of commercial banks also rose by $207 million to $4.831 billion.

The International Monetary Fund’s $7 billion Extended Fund Facility (EFF) review is about to wrap up. Traders are monitoring it to gain clues about the rupee’s future direction. “The tax collection shortfall, which was a major hurdle in securing a successful IMF review, has now been addressed as the IMF has granted a waiver on the tax collection target,” said Chase Securities in a note.

According to news reports, the IMF has agreed to reduce the target by Rs620 billion. To maintain fiscal discipline, expenditure cuts will be implemented while keeping the primary surplus target unchanged, it added. “This development is positive, as no other significant concerns appear to be outstanding, suggesting that the review is likely to be successfully cleared.”