The Pakistani rupee weakened marginally against the US dollar on Tuesday due to rising demand for the foreign currency, primarily driven by import and corporate sector payments.
The rupee closed at Rs164.88 against the dollar in the interbank market, down slightly from the previous day’s closing of Rs164.85. According to currency dealers, the market saw a steady demand for the dollar from importers and businesses clearing their international dues.
Dealers noted that this ongoing demand for the greenback is closely linked to rising import activity as the economy gradually recovers and trade volumes increase. The corporate sector is also contributing to the pressure with regular dollar-based transactions and dividend repatriations.
In addition, the rupee faced downward pressure from declining foreign exchange reserves. The State Bank of Pakistan (SBP) reported a fall of $266 million in its reserves, which dropped to $10.096 billion by the week ending June 5, 2020, compared to $10.362 billion a week earlier.
Overall, Pakistan’s total foreign exchange reserves declined by $215 million to $16.705 billion, from $16.92 billion recorded a week earlier. The central bank attributed this decline to external debt repayments amounting to $301 million during the week.
Market analysts believe that the rupee may continue to face short-term fluctuations if import payments remain elevated and reserve levels drop further. They emphasized that managing the trade deficit and ensuring stable reserves are essential for maintaining the rupee’s stability against the dollar in the coming weeks.