Rupee continues to drop

KARACHI: Rupee dropped further on Monday as increased demand for greenback for import payments and dollar outflows to Afghanistan amid political tensions continued to weigh on the domestic currency, dealers said.

Concerns about the potential increase in the current account deficit as a result of higher imports also added pressure on the local unit. In the interbank market, the rupee closed at 167.23 per dollar, down 0.19 percent from the previous close of 166.91.

It broke the 167 level, ending at 168.10 to the dollar in the open market. It closed at 167.90 on Friday. “There were import payments for oil and machinery that pushed the rupee down,” said a currency dealer.

“The outflow of dollars to Afghanistan because of suspension of the banking channels as well as money transfer services following the Taliban takeover and the State Bank’s policy of not defending the currency also led to the continued slide in rupee,” he added.

Now, the US has allowed financial institutions to process personal remittances to Afghanistan, in a bid to ensure the continued flow of humanitarian aid.

“We are monitoring the currency’s move. If the dollar demand continues to go up and the central bank doesn’t intervene, the rupee is likely to accelerate its recent fall towards parity of 168 to the dollar,” said another dealer.