KARACHI: The rupee in the interbank market on Wednesday fell by Rs1.52, or 1 per cent, to close at Rs159.83 against the dollar mainly on panic-buying from importers ahead of resumption of talks with International Monetary Fund.

Read: IMF plan to resume soon, says Hafeez

In the open market, the rupee lost 1.95 and was selling at Rs160.20 to a dollar compared to Rs158.25 on Tuesday, Exchange Companies Association of Pakistan data showed.

“After remaining almost stable over the last two days, PKR was 1.5 down against the dollar, touching the level of 160 on Wednesday. This weakening of PKR against the greenback seemed mostly sentiment driven,” said Sana Tawfik of Arif Habib Ltd.

“The recent news of IMF officials visiting Pakistan soon and resumption of talks with the agency led to panic-buying by importers and hedging their imports. Moreover, some banks squared their short positions which put further pressure on the rupee,” she said, adding that the PKR will remain range bound and likely to close the year at 161 level.

Adviser to the Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh said on Tuesday an IMF staff mission would be arriving here in a few weeks for a shared understanding on tax reforms, higher collections and improvements in the power sector. The rupee peaked at 158.16 against a dollar on Nov 13, gaining about 6.1pc since hitting a low of 168.44 on Aug 26. However, in the last three sessions the local currency has lost 1pc in the interbank market.

“Rupee’s movement can be linked to oil payments and forward booking by some importers which led to exchange rate movement in the interbank market,” Zafar Paracha, General Secretary Exchange Companies Association of Pakistan, told Dawn. “This is short-term volatility and the rupee is likely to recover its ground in the coming week as panic-buying subsides,” he added.

Published in Dawn, November 19th, 2020