Rupee weakens

KARACHI: The rupee weakened against the dollar in the interbank market on Monday, dealers said.

It closed at 168.72 per dollar, compared with the previous close of 168.19, falling by 0.31 percent. In the open market, the rupee ended at 169.70 to the dollar. It finished at 168.80 on Friday.

Dealers said the local unit remained under pressure due to increased demand for the greenback from importers. The State Bank of Pakistan hiked policy rate by 25 basis points to 7.25 percent. It said the flexible market-based exchange rate regime has performed well since its introduction in June 2019, including through the Covid shock. The rupee depreciated by 4.1 percent since the last MPC meeting in July.

It has overseen a healthy modulation of the current account and supported a critical build-up in the country’s gross and net foreign exchange reserves despite external pressures. Under this regime, the SBP does not suppress an underlying trend in the exchange rate and any interventions are limited to address disorderly market conditions, it said. Since its floatation, the rupee has moved in an orderly manner in both directions and has depreciated by only 4.8 percent to date, much less than many other emerging market currencies over the same period. Since the rupee was floated, SBP’s gross foreign exchange reserves have nearly tripled to a record $20 billion, while net international reserves have risen by nearly $16 billion between end-June 2019 and end-August 2021, it added.