Rupee weakens

KARACHI: The rupee ended weaker in the interbank market on Monday on increased dollar demand from banks and importers, dealers said.

The rupee closed at 166.98 to the dollar, compared with previous close of 166.76. "The rupee is likely to stay under pressure, trading at 167 level against the dollar in coming days," said a dealer. "The inflows in the shape of remittances and exports remained thin due to coronavirus disruptions."

Dealers said a frequent foreign selling in fixed income markets also weigh on the currency and the foreign exchange reserves. In open market, the rupee, however managed to gain. The rupee ended at 167 per dollar, up from previous close of 168.

Traders also expressed concerns about approximately $800 million decline in the central bank's foreign exchange reserves. The likelihood of delaying the release of $450 million third tranche to Pakistan from the IMF also undermined market sentiment, they added.

The State Bank of Pakistan’s foreign reserves fell to $11.185 billion in the week that ended on March 27 from $11.989 billion a week earlier. Traders said the expected multilateral loans and grants could help stabilise markets and provide cushion to foreign exchange reserves.

Pakistan requires $3-4 billion foreign financing to meet its balance of payments needs. The government’s plans to secure foreign inflows via issuance of sovereign bonds in international capital markets and privatisation of power plants are unlikely to materialise due to Covid-19 pandemic.