Rupee weakens

The rupee extended losses in the interbank market on Monday due to importer dollar demand, dealers said.

The rupee closed at 156.96 per dollar in the interbank market, Rs1.12 weaker, from previous close of 155.84. In the open market, the rupee ended at 157 to the dollar, compared with 157.50 in Friday’s session.

Dealers said the rupee maintained its downward trend due to persistent dollar demand from importers. “The forex market looks unease in coming days due to payment pressure,” a dealer said. Pakistan has to make $80 million loan repayment to the IMF by the end of this month.

Traders viewed that the rupee would become more volatile after the implementation of the IMF’s supported Extended Fund Facility. The IMF accord, which must still be approved, foresees a “market-determined” rate for the rupee. At present, the currency - which many analysts consider overvalued - is managed by the central bank in a de facto controlled float.

The rupee has lost more than 10 percent this year, after falling 37.05 percent in 2018. The sliding rupee has caused alarm in Pakistan, which is already facing inflation likely to average over 8 percent for the year and surging costs for fuel and power, which are both heavily influenced by the dollar exchange rate.