Rupee ends weaker as increased dollar demand exerts pressure

KARACHI: The rupee lowered on Monday, pressured by dollar demand from importers and exporters’ sluggish greenback sales.

The rupee closed at 282.06 against the US dollar, down 0.03 per cent from the previous session.Foreign exchange traders attribute the rupee’s weakness to a mismatch between the demand and supply of dollars in the market.

“This situation has arisen due to increasing import payments, a lack of dollar sales from exporters, and a slowdown in remittances,” the trader said.“The local currency is depreciating, even though there are less than two weeks until Eidul Azha. However, we are optimistic that remittance flows related to Eid will soon pick up momentum,” he added.

According to a note by Tresmark last week, several factors are contributing to the recent weakness of the rupee. These include a surge in defence-related spending, outflows related to Haj, and backlog clearance following the reopening of the Afghan border.

Furthermore, the central bank’s decision to allow some swaps to mature without rolling them over through sell-buy arrangements is weakening both spot rates and swap premiums, adding further pressure on the local currency. The disparity between dollar inflows and outflows resulted in banks being deficient in their net open positions, delaying the retirement of letters of credit, and elevating the open market rate to 284 per dollar.The rupee traded at 284.29 per dollar in the open market, compared with 284.15 in the previous session.