The rupee weakened against the dollar on Tuesday on high dollar demand from importers ahead of interest rates hike be the State Bank of Pakistan (SBP), dealers said.
The rupee fell to as much as 160.90 to the dollar in early trade. However, it recovered some losses and closed at 160.05/dollar, compared with the previous closing of 159.86.
In the open market, the rupee traded flat at 160.50 against the greenback during the session.
“The volatility in the today's session was observed due to sentiment of one percent hike in the policy rate and some pressure in corporate payments,” said Yaqoob Abubakar, an analyst at Tresmark, the application that tracks financial markets.
“It seems the rupee will remain under pressure in the next few days because of some negative news on the economic front that is rescheduling payment against foreign debt, decrease in foreign direct investment (FDI), weak economic indicators and ultimately hike in the policy rate by one percent.”
The State Bank of Pakistan (SBP) on Tuesday raised the key policy rate by 100 basis points to 13.25 percent to tame inflationary pressures and arrest fall in the currency.
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