Rupee erases gains

KARACHI: The rupee gave back the previous session’s gains to close slightly lower against the dollar in the interbank market on Tuesday.

The rupee ended at 281.67 per dollar, compared with the previous close of 281.56.The rupee also depreciated in the open market, trading at 283.69 versus the dollar. It had traded at 283.5 on Monday.

Despite prevailing positive sentiment surrounding Pakistan’s economy, the local unit lost ground again after rebounding from six straight sessions of declines. This was caused by dollar demand from importers, dealers said.

In an interview with Reuters, Finance Minister Muhammad Aurangzeb said that the recent military escalation with its arch-rival India will not significantly affect the budgetary situation and can be managed within the existing fiscal space, negating the necessity for a fresh economic assessment.

“Investor confidence has been further reinforced by the finance minister’s assurance that the recent conflict will not derail IMF targets or fiscal consolidation efforts. He also said that the upcoming IMF tranche is likely to be received within the next couple of days,” read a Chase Securities note.

According to reports, the federal government has decided to prepare the new budget using an exchange rate of Rs290 per dollar. This decision is based on the expectation of only 3.6 per cent depreciation, attributed to a largely stable external account anticipated in the next fiscal year, supported by an International Monetary Fund (IMF) programme.