Rupee firm

The rupee continued its declining trend against the dollar in the open market on Tuesday, amid tight dollar supplies, dealers said.

The rupee closed at 144 against the dollar, 0.20 percent weaker from the previous closing of 143.70, according to the rates published by the Exchange Companies Association of Pakistan.

In the interbank market, the rupee ended unchanged at 141.39 against the greenback for the third consecutive session.

“The open market continues to face shortage of greenback. We (dealers) are being unable to meet demand for the dollars even at higher prices,” a dealer said.

The market players expect the rupee to weaken further and see a significant risk of currency devaluation in the short-to-medium term in respond to signing a three-year $6 billion Extended Fund Facility (EFF) with the International Monetary Fund. The Fund’s prior action to implement its programme includes a market based exchange rate system.

The rupee lost a third of its value during the past year and the central bank’s foreign exchange reserves were adequate to cover two months of imports. The State Bank’s foreign reserves plunged to $8.9 billion during the week ended May 13 from $16 billion in May 2017.

The government on Tuesday announced the tax amnesty scheme to generate revenue and document the economy.