Rupee loses Rs0.13 on oil import payments

Analyst says drop in currency is temporary, will reverse soon

KARACHI:

Pakistani currency depreciated Rs0.13 and closed at Rs278.70 against the US dollar in the inter-bank market on Monday, partly reversing earlier gains owing to the uptick in demand for the greenback for oil imports.

According to the State Bank of Pakistan (SBP) data, the rupee had closed up at Rs278.57 against the dollar on Friday.

A leading analyst said the latest decrease in the currency came on the back of oil import payments during the day. However, the analyst added "the drop in the currency seems temporary and would reverse in a day or two."

The Exchange Companies Association of Pakistan (ECAP) reported that the local currency slipped Rs0.17 on a day-on-day basis, closing at Rs281.03/$ in the open market.

Market talk suggests that the latest drop in the currency came in the backdrop of persistent delay in final approval from the International Monetary Fund (IMF) executive board for a loan programme of $7 billion for Pakistan.

The country is still not on the agenda of the next executive board meeting scheduled for September, it has been learnt.

Besides, foreign investors withdrew $78 million from the government debt securities, ie, treasury bills last week ahead of the central bank's monetary policy meeting scheduled for Friday. The outflow suggests that the central bank will make a third straight cut in the policy rate, which will weigh on the foreign exchange reserves and impact the rupee-dollar parity.

The local currency depreciated despite robust inflows of remittances, estimated at nearly $3 billion for August.