Rupee rises for second straight session

KARACHI: The rupee extended gains for the second consecutive session against the dollar in the interbank market on Monday.

The rupee ended at 278.44 to the US dollar, compared with Friday’s close of 278.54.Dealers said the rupee is anticipated to continue its stable trend in the near term, supported by ample dollar liquidity amid firm foreign exchange reserves. The rupee gained 10 paisas to close at 280.3 against the greenback in the open market.

The State Bank of Pakistan reported that the real effective exchange rate index appreciated to 101.5 in July, compared with 100.1 in June. According to a report by financial terminal Tresmark, the rupee is stable in the short term but is susceptible to political jostling in the medium to long term.

“Subsequently, exporters were seen booking forwards up to three months. There seems to be an untold deadline of November coinciding with the US elections. Very few are guessing what happens to the rupee post elections,” it said.

“For the first time in many months, importers are getting preferential treatment due to ample dollar liquidity. Due to this, the grey market has also come down from 285/$ to around 282/$,” it added.

With interest rates forecast to drop, premiums are expected to drop substantially before the end of the month, it noted. Analysts are expecting three-month premium to drop from Rs7.7 to Rs6.5. This potential drop in premium should accelerate forward booking by exporters.