Rupee weakens

KARACHI: The rupee erased gains that it made in the previous two sessions in the open market on Thursday due to a dearth of dollars. It lost Rs5 to close at 305/dollar in the open market, as per the rates published by the Exchange Companies Association of Pakistan (ECAP). The local unit had finished at 300 to the dollar on Wednesday.

Since many imports are being made through the hawala/hundi channel, where demand far outweighs supply, analysts had previously anticipated that the rupee's rebound would be temporary and that the currency would once again come under pressure in the open market. “People are reluctant to sell dollars, which reduced supply and led to a decline in the value of the rupee relative to the dollar,” said a currency dealer.

In the interbank market, the rupee edged higher against the dollar. It ended at 286.81 per dollar, compared with 286.88 recorded in the previous session. “Deteriorating external account position along with broad-based strengthening of USD against other currencies led to 27.8 percent interbank depreciation of PKR, from the end–June 2022 exchange rate of 204.8 to 283.8 in March 2023,” said Pakistan Economic Survey 2022-2023, which was released on Thursday.