Rupee gives up gains

KARACHI: The rupee ended slightly weaker on Monday weighed down by dollar demand from importers, snapping an eight-day winning streak, dealers said.

In the interbank market, the rupee closed at 277.86 per dollar, compared with the previous close of 277.83.Dealers said that the local unit somewhat declined as exporters’ dollar sales did not generate enough inflows to meet importers’ demand.

The rupee also gained in the open market. It was trading at 280.68 per dollar up from 280.7 in the previous session. Analysts expect the rupee to trade in a range-bound manner as investors await the approval of a $7 billion loan programme for Pakistan by the International Monetary Fund’s executive board next week.

The IMF’s board will meet on September 25 to discuss a new 37-month loan agreed in July with Pakistan. This new Extended Fund Facility arrangement that will be subject to board approval follows the successful implementation of the 2023 nine-month standby arrangement, according to the IMF.

With the IMF deal still on the ropes, traders and exporters are slow on selling dollars forward. This situation has been further exasperated by a sharp decline in forward premiums, according to a note from Tresmark.

“However, we expect activity to pick up as the IMF date gets closer,” it added.“The market is expecting the rupee to remain range-bound. Reserves are going up, remittances are having an outstanding performance, real effective exchange rate (REER) is on the decline -- and the market is comfortable with the surplus dollar liquidity in the system, which will only get better with the fresh IMF engagement.”