Dubai: Pakistan’s rupee (PKR) dropped by 64 paise against the dollar in the last trading session owing to high dollar demand for import payments.
In the interbank market, the rupee was quoted closing at 159.94 to the dollar on Friday, compared with Thursday’s close of 159.30. It fell by 64 paise during the session.
Against the UAE dirham, PKR lost 5 paise for both buying and selling closing at 42.85 and 43.05, respectively.
According to the currency dealers, the rupee weakened 0.40 per cent against the dollar on Friday because of high demand for the US currency to pay for imports.
While the currency outflows exceeded the inflows, analysts said the pre-Eid expatriate remittances somewhat counterbalanced the outflows for import bills and prevented a sharper fall of rupee against the dollar.
In addition, an increase in the country’s foreign exchange reserves, owing to the receipt of $1 billion loan from China and $400 million from the World Bank, too have somewhat eased dollar supply in the market last week.
The Pakistani rupee is predicted to remain range-bound against the US dollar during this week’s trading with inflows from remittances to coincide with Eid, which traders said will balance the dollar demand from importers. However, the outlook for PKR is somewhat negative on account of rising import demand and inflationary pressures gathering pace in the domestic market.
Pakistan is facing rising inflation and have been witnessing hikes in prices in several things including fuel and food items.
Bankers said the exchange rate of 160/dollar looks like a critical resistance level and most market participants say the central bank will defend this level. In a recent statement, the State Bank of Pakistan (SBP, Pakistan’s central bank) governor said that negotiations with the International Monetary Fund on the sixth review of its $6 billion loan programme were going smoothly and could also shore up market sentiment.
Despite such optimism, the rupee’s direction against the greenback is inclined southwards as imports are seen gaining momentum along with the post-Covid economic recovery. Market players see the rupee weakening to Rs162 by the end of September.