Rupee weakens further

KARACHI: The rupee posted more losses against the dollar on Wednesday amid higher dollar demand from importers, and dealers said the domestic currency is likely to stay under pressure because of import payments, dealers said.

The rupee closed at 166.87 to the dollar in the interbank market, compared with the previous close of 166.39. It depreciated by 48 paisas or 0.29 percent.

In the open market, the rupee fell by 60 paisas to 167.80 versus the greenback in the open market.

“There were import payments of oil and machinery, which drove the rupee down,” said a currency dealer.

“There were also concerns on the economic front due to the rising trade imbalance amid increasing imports, which could widen the current account deficit in coming months,” he added.

The rupee traded as low as 167 against the dollar during the session, he said.

Dealers see the near-term outlook for the rupee remains bearish. The rupee could touch 168 levels at any time because of higher commodities and industrial imports.

“We are monitoring at what level the central bank intervenes the market to stabilise the rupee,” said another dealer.

The local unit remained under pressure, despite receiving Special Drawing Rights Allocation of $2.75 billion from the International Monetary Fund.

Analysts said as the country has moved towards a flexible exchange rate, the government doesn’t use official flows to defend the exchange rate parity.

The exchange rate is determined by the demand and supply of dollars.