Rupee weakens

KARACHI: The rupee ended lower on Monday, amid market demand for the greenback, as business activity resumed after Eid holidays, dealers said.

In the interbank market, the rupee closed at 167.46 against the dollar, 0.28 percent down from the previous closing of 166.98. However, the local currency ended firmer at 167.30 against the dollar in the open market.

“As expected the rupee remained under pressure due to inline corporate payments after Eid holidays,” a dealer said.

“Lack of fresh foreign inflows, declining foreign currency reserves and higher inflation number for the month of July published today pushed the local unit down during the session.”

Analysts expect the country’s import bill to rise going forward given lower interest rate, which may push the demand for the private sector credit. “While vehicle imports may also increase, power-related machinery imports should kick in as many Thar-related power projects are about to commence during 2021. Moreover, higher oil demand and further rise in crude oil prices may keep petroleum import bill elevated,” an analyst at Insight Securities said in a report. “Lower interest rate, debt repayments (SBP forwards / swaps at $5.7bn – June 2020) may pose upside risk to import bill, which can create dollar demand / supply imbalance.”