The rupee closed at 85.10/17 to the dollar, compared with Tuesday's close of 85.25/30. – Reuters (File Photo)

KARACHI: The Pakistani rupee rose on Wednesday as dollar supplies outmatched the demand for the US currency, and dealers said they expected to see the rupee steady near-term.

“I won't say that the demand for the dollar is soft, its just that the inflows are good and the supply is simply more than the demand,” said a dealer at a foreign bank.

“I expect the rupee to stay stable for now, though some downward pressure may be seen in the medium to long-run, as payments are likely to pick up,” he said.

The rupee has been supported in recent months by rising dollar inflows due to higher export proceeds as well as record inflow of remittances.

These rising inflows have already pushed the country's foreign exchange reserves to a record $17.95 billion.

Meanwhile, stocks also edged higher and volumes improved, but dealers said most of the interest was in the second-and third-tier stocks.

The Karachi Stock Exchange's benchmark 100-share index ended 0.27 per cent, or 31.80 points, up at 11,933.17.

Turnover rose to 88.30 million shares from 74.12 million  shares on Tuesday.

“We saw better volumes as compared to the last week or two, though still the lower priced stocks were more active,” said Ashraf Zakaria, a dealer at brokers Ali Hussain Rajabali and Co.

“However, going forward I see some interest in the banking stocks as their first quarter results are due soon and that should excite some investors,” he said.

In the money market, overnight rates rose to the top level of 13.90 per cent from 13.50 per cent a day earlier, and dealers said investors were awaiting the result of a fortnightly treasury bills auction, to be announced later in the day.

The State Bank of Pakistan has set a target of 200 billion rupees ($2.35 billion) for the sale of the 3-, 6- and 12-month t-bills. ($1 = 85.10 Pakistani rupees)