Rupee falls on high dollar demand talk

Pakistani currency on Monday depreciated Rs0.17 and settled at Rs278.37 against the US dollar in the inter-bank market over projections that demand for the foreign currency was set to jump in the coming weeks following a reduction in the State Bank of Pakistan (SBP)’s policy rate. According to the central bank data, the rupee had closed at Rs278.20 against the greenback on Friday. The local currency has gained a net 10.32%, or Rs28.73, over a period of nine months compared to the record low close at Rs307.10/$ in the first week of September 2023. Later in the day, the central bank slashed its benchmark interest rate in line with market expectations for the first time in four years, reducing it by 1.5 percentage points to 20.5%. The monetary easing is expected to create an additional demand for US dollars for import payments.