Rupee extends losses

KARACHI: The rupee extended losses for the second consecutive session on Tuesday, as strong dollar demand from importers to make payments put pressure on the domestic currency, traders said.

The local currency closed at 166.95 against the dollar, 0.13 percent lower than Monday’s closing of 166.72 in the interbank foreign exchange market.

“There was a demand for the dollars. We saw some importers and domestic companies buying dollars for payments,” a trader said.

“We think the dollar demand could continue for some time.” Traders believe the local unit will struggle to gain any ground until export proceeds increase.

In the open market, the rupee also dropped 40 paisas to 167.10 against the dollar.

Analysts expect the rupee to depreciate five percent against the dollar in the current fiscal year of 2020/21 due to the manageable current account deficit and subdued inflation outlook.

The rupee is now slightly below its equilibrium value as shown by the fresh reading of 95.7 as measured by the real effective exchange rate.

The current account deficit is forecast to clock in at $4 billion, or 1.5 percent, of the gross domestic product for the last fiscal year, as a sharp decline in exports is likely to be more than offset by decrease in imports.