Rupee weakens against dollar

KARACHI: Rupee lost last session’s gains on Monday as investors choose caution ahead of the central bank’s monetary policy outcome, with fears of renewed political turmoil after the government charged former premier Imran Khan under the anti-terrorism act, dealer said.

Reversing its rising trend, the local unit depreciated by 4 rupees in the open market. It ended at 222 to the dollar, compared with 218 on Friday. The rupee fell 0.93 percent to close at 216.66 per dollar in the interbank market. It settled at 214.65 in the previous session. The market expected the State Bank of Pakistan (SBP) would keep the interest rate steady at 15 percent in its monetary policy meeting, which was scheduled after the trading hours on Monday. This kept the investors on edge in the currency market, bringing the rupee down compared to greenback.

Forex dealers kept a watch on the SBP’s assessment of the state of the country's economy and its forward guidance on interest rates. “The market is looking at whether the SBP’s monetary policy will be rupee positive,” said a forex dealer.

“The sentiment about the economic recovery has also been weakened, which is reflected in the currency moves. After gaining, the rupee has lost grounds in both the currency markets,” he added.

The major reason for a change in the sentiment was market worries surrounding the politics of the country, after workers and supporters of the Pakistan-Tehreek-e-Insaf rushed to Khan’s residence in Islamabad to protest the possible arrest of the former premier.

The SBP’s forex reserves have slipped below $8 billion—enough only to pay more than one month of imports. Though dollar demand from oil importers remained subdued, with the SBP’s administrative measures keeping non-oil imports in check. However, the market expects these imports would see a rising trajectory in times to come, according to dealers. Meeting expectations, the SBP kept the policy rate unchanged later in the day.