Rupee declines, overnight rates up

Steady dollar inflows could not stop rupee from shedding value, say dealers.

KARACHI: The rupee fell on Friday as higher dollar demand from importers pushed the US currency up, despite steady inflows, dealers said. The rupee ended at 85.80/90 to the dollar, compared with Thursday’s close of 85.73/80.

“Banks were aggressively buying dollars today [Friday] as there was pretty high demand from importers, particularly for oil import payments,” said a dealer at a foreign bank.

Dealers said steady dollar inflows could not stop the rupee from shedding value, although they did manage to cap gains. “Exporters were in the market to sell dollars and gain advantage of the high levels, which prevented a sharper fall in the rupee,” said another dealer.

Rising remittances from Pakistanis working abroad have also contributed to steady dollar supplies, dealers said. According to official data, remittances rose 17 per cent to $5.3 billion in the first six months of fiscal year 2010-11 (July-June). In the money market, overnight rates rose to close at 13.75 per cent from 11 per cent a day earlier on outflows worth Rs53 billion ($618 million).

Published in The Express Tribune, January 22^nd, 2011.