Rupee extends falls

KARACHI: The rupee dropped further against the dollar on Tuesday, breaching 157 levels, dragged by higher import payments and thin supplies, with more weakness expected, traders said.

The rupee closed at 158.19 per dollar, 0.43 percent or 68 paisas weaker than Monday’s close of 157.51 in the interbank currency market.

It also continued to be under pressure in the open market, tracking losses in the rupee’s value in the interbank market. The local unit fell 80 paisas against the dollar. It ended at 158.80 to the dollar, compared with the previous close of 158.

“The rupee is still on a downward trend. There’s a market-based exchange rate system so, the rupee is seeing volatility as per the demand and supply factor,” said a foreign exchange trader with one commercial bank. “Demand is higher and inflows are subdued. Exporters are reluctant to sell dollars, with no suspected intervention by the central bank, hinting at further declines in the local unit in coming days,” he added.

The rupee is expected to move in a band of 158.50 to 159 this week, with a few dealers expecting it to fall to 160 by the end of this month.

The rupee has been under pressure owing to persistent import payments, rise in international commodity prices and external debt repayments.

“The underlying sentiment is bearish as the uncertainty about the release of around $1 billion loan tranche from the IMF raised fears of putting pressure on the country’s foreign exchange reserves,” said another dealer. In March, Pakistan successfully completed the combined second-fifth reviews of the IMF Extended Fund Facility.