Rupee ends weaker against dollar

KARACHI: The rupee ended lower against the dollar in the interbank market on Monday, pressured by dollar demand from importers.

The rupee closed at 277.78 per dollar, compared with its previous close of 277.7.In the open market, the rupee also lost ground. It was trading at 278.71 versus the dollar, down from 278.62 in the previous session.

Traders pointed to increased dollar demand from importers and weak supplies from exporter conversions as factors that put pressure on the local unit. Traders thought that Pakistan’s central bank’s decision on interest rates would be one of the most important factors in determining the direction of the currency. Due to a substantial decrease in inflation, the market expected a rate cut ranging from 200 to 300 basis points (bps).

The State Bank of Pakistan cut its benchmark interest rate for the fourth straight time on Monday. It reduced the rate by 250bps to 15 per cent bringing the total rate cut to 7.0 per cent since June.

Analysts expect the rupee to stay stable in the fiscal year 2025 supported by improved external account and higher financial inflows. “The Pakistani rupee (PKR) on the back of external account stability and higher inflows has appreciated 2.6 per cent in FY24 and 0.3 per cent in FY25TD against the US dollar. We expect the rupee to be around 277-282 against the dollar by June 2025 and 295-300 by June 2026,” said Topline in a report.