Rupee weakens

KARACHI: The rupee lost more ground on Thursday on growing demand for dollars from importers and stronger greenback strength against other major currencies after the U.S. Federal Reserve hiked interest rates , said dealers.

The local unit finished at 221.95 to the dollar, 0.23% lower than Wednesday’s close at 221.43 in the interbank market. On the free market, it lost 75 paisas to settle at 227.75 against the dollar.

Importers have been buying dollars to make payments. Importers’ demand for dollars has been consistently high as it appears that the State Bank of Pakistan has authorized the opening of Letters of Credit (LC), which has exerted pressure on the rupee,” said a forex trader.

During his visit to Karachi, Finance Minister Ishaq Dar talked to Governor SBP about the problem of stuck LCs and decided to release LCs up to $100,000.

The appreciation of the US currency against other currencies also weakened the rupee. The US dollar strengthened following a 75 basis point hike in interest rates by the Fed to combat soaring inflation.

“The market has not reacted positively to the improving trade balance,” said another dealer.

The trade deficit fell 26.59% to $11.469 billion in the first four months (July-October) of the current fiscal year, mainly due to lower imports.