Rupee weakens to 209/dollar in open market

KARACHI: The rupee weakened further on Wednesday, erasing all of previous session gains and heading towards a record low, as uncertainty over the International Monetary Fund (IMF) $6 billion bailout deal widely disappointed investors.

The rupee crossed 209 mark against the dollar in the open market and the dealers expect the local unit likely to remain under pressure until the IMF agrees with Pakistan on measures needed to revive the bailout programme. The greenback was quoted at 209.50 in the kerb market, according to rates published by the Exchange Companies Association of Pakistan (ECAP). The domestic currency was sold at 207 on Wednesday. It fell by 2.50 rupees on a day-on-day.

“The rupee is losing ground, tracking decline in the value in the interbank market,” said Zafar Paracha, the general secretary of ECAP. “The exchange companies are selling 99 percent of their dollar stocks to the interbank market and there is a shortage of hard currency in the open market.”

Paracha said fears of a delay in the IMF’s loan tranche weigh on the local unit.

“I think the rupee will continue its losing streak unless Pakistan and the IMF staff reach a staff-level agreement on policies to complete the seventh and the eighth reviews,” added.

The rupee closed weaker for a second consecutive session in the interbank market. The rupee ended 0.50 percent lower at 207.99 per dollar. It closed at 206.94 in the previous session.

Dealers said a renewed dollar demand from importers ahead of long holidays due to Eidul Azha put pressure on the currency.

“Dollar buying from importers before holidays offset the remittance inflows coming from overseas Pakistanis,” the dealer said.