Rupee hits two-week low at Rs278.70/$

KARACHI:

The Pakistani rupee ticked down by Rs0.06 to close at a two-week low of Rs278.70 against the US dollar in the interbank market on Tuesday, marking the second consecutive day of decline. According to data from the State Bank of Pakistan (SBP), the domestic currency has cumulatively depreciated by Rs0.16 against the dollar over the past two days.

In the open market, the Exchange Companies Association of Pakistan (ECAP) reported that the rupee weakened by Rs0.25 on a day-to-day basis, closing at Rs280 per dollar. The ongoing downturn suggests either an increase in demand for foreign currency or a slowdown in its supply in the domestic economy, possibly linked to delays in the International Monetary Fund's (IMF) new $7 billion loan programme for Pakistan.

Recent updates indicate a drop in the country's trade deficit, coupled with a slight rise in export earnings for August. This suggests a surplus supply of dollars in the market compared to muted demand for imports. However, the rupee continues to face pressure, as the SBP is reportedly purchasing dollars from local markets to meet upcoming foreign debt repayments and bolster the country's foreign exchange reserves, which currently stand at a precarious $9.40 billion, covering less than two months of imports.

The rupee's decline persists amid concerns over the domestic economy, which is grappling with mounting debt, high interest payments, and soaring energy prices, all of which are hindering industrial output. Despite Finance Minister Muhammad Aurangzeb's recent statement indicating that the next IMF loan tranche is expected this month, the currency markets remained unmoved.