Currency: Rupee gains, overnight rates higher

KARACHI: The rupee rose on Wednesday as dollar supplies outmatched demand for the US currency, and dealers said they expected to see the rupee steady in the short-term.

The rupee closed at 85.10/17 to the dollar, compared with Tuesday’s close of 85.25/30.

“The demand for the dollar is not soft – it is just that the supply is greater than the demand,” said a dealer at a foreign bank.

“We expect the rupee to stay stable for now, though some downward pressure may be seen in the medium to long-run, as payments are likely to pick up,” he said.

The rupee has been supported in recent months by rising dollar inflows due to higher export proceeds as well as record inflow of remittances.

In the money market, overnight rates rose to the top level of 13.90 per cent from 13.50 per cent a day earlier.

Published in The Express Tribune, April 7^th,  2011.