Rupee breaches 281/dollar level on importer dollar demand

KARACHI: The Pakistani rupee extended losses for a fourth consecutive session on Thursday as dollar demand from importers exceeded remittances and greenback sales from exporters.

In the interbank market, the rupee closed at 282.06 against the US dollar, down 0.03 per cent from the previous close of 281.97. The rupee declined in the open market, tracking losses in the interbank market. The local currency traded at 284.14 per dollar, compared with 284 on Wednesday.

Dealers said the rupee fell past a key support level of 281.9 due to dollar demand from Importers. Additionally, dollar supplies were short due to a slowdown in remittances, even though the animal sacrifice festival of Eidul Azha is drawing near and is due early next month.

Exporters were not selling large amounts of dollars in advance, dealers added. According to the latest IMF report, banks continue to manage most of their foreign exchange inflows and outflows internally, resulting in low volumes in the interbank market.

The IMF recommends reversing the January 2022 decision to shorten the repatriation period for export proceeds once macroeconomic stability and balance of payments conditions improve. The rebuilding of forex reserves through foreign exchange purchases should continue, as buffers remain low by Pakistan’s standards. Moreover, the global lender said that the exchange rate flexibility remains necessary to support external rebalancing and increase resilience to external shocks.