Rupee appreciates

KARACHI: The rupee posted gains on Monday on the back of higher inflows and slow demand for dollars, with dealers expecting the local unit to stay steady in the coming days.

In the interbank market, the rupee closed at 161.23 per dollar, up from 162.32 on Friday. It appreciated by Re1 or 0.68 percent. The rupee ended at 161.50 to the dollar, unchanged from the previous close in the open market.

“Dollar demand from importers was not higher today. Supplies were healthy so the rupee strengthened against the greenback,” said a foreign exchange dealer. “Inflows from remittances and export receipts started materialising, which supported the local unit.”

There were only two working days last week. In addition to Pakistan, Middle Eastern and western countries were closed on account of Eid-ul-Azha holidays.

Dealers expect the rupee to move in the band of 160.70 to 161.20 to the dollar this week. The central bank’s monetary policy decision due on Tuesday, however, will give more clarity on the direction of the rupee in days ahead.

Analysts see the rupee appreciating to 158-159 level in the near-term. The decline in the Real Effective Exchange Rate (REER) and higher foreign exchange reserves are likely to support the rupee. REER index fell 2.3 percent month-on-month to 99.9 in June.

With a comfortable cushion of the foreign exchange reserves, the State Bank of Pakistan is in a strong position to keep the markets stable. SBP reserves increased $845 million to clock in at $18 billion as of July 16.