Rupee extends losses for third session

KARACHI: The rupee saw more losses on Friday on demand for dollars from importers as political unrest continued to weigh on investor sentiment, dealers said.

The local unit fell 2.1 rupees against the dollar in the open market. Exchange firms quoted the rupee at 227.50 to the dollar, down from 225.40 on Thursday.

In the interbank market, the rupee fell 0.44 percent or 97 paisas to 222.47 to the dollar.

“The demand for dollars came from importers. However, due to political unrest, exporters were reluctant to sell dollars,” said a forex trader.

Imran Khan, former prime minister, and his supporters have embarked on a “long march” from Lahore to Islamabad in a bid to pressure the government to call a snap election.

Dealers said the market was worried, following rising tensions between the government and military forces and Pakistan’s Tehreek-e-Insaf (PTI) after the latter began its protest march.

“The foreign exchange market was in a panic. Investors feared that the country would become unstable,” said Malik Bostan, chairman of the Exchange Companies Association of Pakistan.

“Political unrest would have a serious impact on the economy,” Bostan added.

He said politics, not economic fundamentals, caused the recent bout of rupee devaluation. He went on to say that the market was worried about whether the long march would be peaceful.

Economically, however, good news is yet to come. Mohammed bin Salman, Crown Prince of Saudi Arabia, is due to visit Pakistan soon, which could open a door for Saudi investments in Pakistan, according to Bostan.

Prime Minister Shehbaz Sharif said the kingdom would establish an oil refinery at a cost of $10-12 billion in the country.

Central bank foreign exchange reserves fell by $157 million to $7.439 billion in the week ending October 21.

However, new inflows of $1.5 billion from the Asian Development Bank raised the reserves of the State Bank of Pakistan to $9 billion.