Rupee weakens

KARACHI: The rupee gave up the previous session’s gain on Wednesday amid higher dollar demand from importers and fears of worsening current account deficit, dealers said.

In the interbank market, the local unit ended at 177.62 per dollar, compared with Tuesday’s close of 177.41. It depreciated by 0.12 percent.

In the open market also, Pakistani currency lost 50 paisas to close at 179 to the dollar. Dealers fear spike in global oil and other commodity prices will further weigh on the local unit.

“The entire move of the rupee is linked to four factors; the demand for the greenback went up due to import payments, international crude prices continued soaring, investors were worried about the prime minister’s relief package ahead of the IMF and Pakistan talks for the completion of the seventh review of the Extended Fund Facility, and the FATF [Financial Action Task Force] review is under way. Therefore, the rupee remained under pressure,” said a currency dealer.

Brent crude futures surged by more than $8, touching a peak of 113.02 a barrel, the highest since June 2014. The escalating fears of supply disruption following large sanctions on Russian banks spurred by the Ukraine conflict led to a significant rise in oil prices.

The market is closely watching talks between Islamabad and the International Monetary Fund (IMF) to complete the seventh review of the $6 billion loan programme.

The review will start on March 4 and the Fund will discuss merit of the recently announced relief package amid a challenging external environment. The FATF upcoming decision would decide whether Pakistan should exit from the grey list.