Rupee weakens

KARACHI: The rupee fell on Friday, hitting near a six-week low, as increased dollar demand for import payments weighed on the currency.

The rupee closed at 163.10 to the dollar, after hitting 163.49 to dollar in intraday trade, its lowest since April 20. The rupee fell 0.69 percent or Re1.12 during the session. It lost Rs2.18 against the greenback in two days.

The rupee ended at 163.25 per dollar in the open market. It had finished at 163.50 in previous trade.

Traders said the demand for the dollar increased after the resumption of Eid holidays and ease in lockdown in the country and globally.

“Importers bought dollar to settle their bills, while inflows from remittances and exports remained thin,” said a dealer at a mid-tier bank.

“The companies are going to resume manufacturing and production activity, taking advantage of eased coronavirus lockdown rules, which increase the import of various machinery and equipments, exerting pressure on the PKR,” he added.

The rupee is also weighed down by decline in the country’s foreign exchange reserves amid higher foreign debt repayments. Pakistan’s foreign exchange reserves declined to $18.597 billion in the week ended May 21 from $18.618 billion a week ago.

Dealers expect the rupee to remain under downside pressure unless fresh dollar inflows come in. Market participants expect the rupee to see another wave of depreciation against the dollar by June this year due to falling exports and remittances.