KARACHI, May 16: The rupee firmed on Friday as dealers said there was increased supply of US dollars, but trading remained thin.

The rupee was quoted at 68.30/65 to the dollar at the close, compared with Thursday’s close of 68.70/69.25 and a record closing low of 69.40/60 struck on May 9.

Dealers said there were a few deals struck between 68.65 and 69 rupees to the dollar.

There was little reaction to a cut in Pakistan’s sovereign rating on Thursday by Standard & Poor’s, citing expanding budget and trade deficits and a volatile political setting.

Those factors have hurt the currency of late, along with inflation, at its highest since the 1970s.

The rupee has also been under pressure due to increased demand for dollars from importers, particularly for oil payments as a result of rising international prices.

There was speculation that the central bank, which closely shepherds the exchange rate, could consider aggressive monetary tightening before its next scheduled policy review in July to curb import demand.

This week Mirza Baig, a strategist at Deutsche Bank, said in a note that “the rupee’s sharp plunge in recent weeks creates an immediate need for authorities to stabilise market sentiment”.—Reuters