Rupee rises

KARACHI: The rupee ended stronger against the dollar in the interbank currency market on Monday, dealers said. The rupee closed at 161.05 against the dollar, compared with the previous closing of 161.37.

In the open market, the rupee closed at 161.20, compared with 161.80 in the previous session. Dealers said the currency continued to gain due to smooth supply of the greenback in the market, amid robust inflows from remittances and international financial institutions.

“There was a flat dollar demand from importers and the corporate sector,” a trader at a local commercial bank said. “The improvement in the real effective exchange rate (REER) also helped the rupee gain grounds.”

Traders expect the rupee to trade below 161 level against the dollar in the coming sessions. Traders said the improvement in both the country’s forex reserves and in the external account has contributed to the rise in real effective exchange rate to 91.69.

These numbers indicate undervaluation of the rupee vis-à-vis its major trading partners, but paving the way for further strengthening of the rupee. The positive data on the current account and the foreign exchange reserves boosted the sentiment.