Rupee may face pressure

The rupee continued to weaken against the dollar in the local currency market in the outgoing week on the back of payments pressure.

The rupee fell 0.75 percent [Rs1.04] in the interbank market on increased dollar demand from importers. The currency also came under pressure on growing expectations that the central bank would continue a more flexible exchange rate strategy in line with the IMF demand.

Moreover, fears of an economic slowdown continue to spark negative sentiment in the financial markets.

The local unit started the week on a positive note, recovering from its previous losses. The rupee rose to 137.84 from 139 in the previous session aided by the central bank’s support.

The currency continued to saw a minor correction, as it settled at 137.79 against the dollar on Tuesday. The rupee lost some grounds in the third trading session, weighed by higher import payments. It ended at 138.59 against the dollar.

On Thursday, persistent bearish sentiments pushed the rupee down to 138.74. Extending losses, the domestic currency closed at 138.88 against the greenback in the last session.

The value of rupee declined 0.86 percent against the dollar. It traded in the ranges of 138.50 and 139.70 during the entire five sessions.

Traders expect the rupee will hold in a 139-140 range for the next week.

“The State Bank of Pakistan is likely to defend the currency at 140 level. However, the rupee will continue to see pressure in the wake of dwindling foreign currency reserves,” a trader said.