Rupee sinks in open market

KARACHI: The rupee slipped against the dollar for a third straight day on Wednesday as dollar demand from importers remained on the upside, while exporters were reported to be sitting on payments, causing a demand-supply mismatch, traders said.

In the open market, the local unit continued its losing streak, falling 7 rupees against the greenback. It ended at 229 per dollar, compared with 222 on Tuesday.

The rupee weakened 0.33 percent to 218.38 versus the dollar in the interbank market.

Dealers said the rupee resumed its decline due to dollar demand from importers following the lifting of a ban on luxury and non-essential items.

“There is a demand for the US currency from importers as the import consignments that were halted due to a ban have started to release. Exporters are holding back dollars. The mismatch between the demand and supply of the dollars is putting pressure on the rupee,” said a currency dealer.

Malik Bostan, President Forex Association of Pakistan, said the imposition of 150 percent regulatory duty on 700 luxury items forced Pakistani traders to import products through Afghan Transit Trade, increasing dollar demand in Peshawar, where the rupee was trading at 230-235 level.

“The open market is experiencing a dearth of UAE dirhams (AED) as the Gulf states made it essential for Pakistani travellers to disclose 5,000 dirhams at the airport at the time of landing. The most recent development has caused Pakistan's currency market to fall short of the AED, and the price of the US dollar in the kerb market has increased as a result of this as well,” Bostan said.

Analysts say strong dollar against global currencies, REER (Real Effective Exchange Rate) touching 98, and political noise have contributed to the rupee’s depreciation.

The REER clocked in at 93.16 as of July as compared to 93.98 in June.