ISLAMABAD: The rupee fell against the US dollar on Tuesday, depreciating by Rs2.38 in the interbank market. The State Bank of Pakistan (SBP) said the dollar closed at Rs206.94, up from the previous day’s close of Rs204.56, which translates into a depreciation of 1.15 per cent for the rupee. Zafar Paracha, the secretary general of the Exchange Companies Asso­ciation of Pakistan, said the main reason for the rupee remaining under pressure was “speculation by banks in the interbank, who are wary because the country has still not received a loan from the International Monetary Fund (IMF)”.

He added that the central bank had also allowed banks permission for imports, which had caused an increased demand for the greenback. “This was not such a big demand […] but banks only believe in earning money regardless of whatever happens to the country,” he opined.

Forex Association of Pakistan President Malik Bostan said that oil payments had put the rupee under pressure. “It is hoped that the rupee begins to strengthen from mid-July,” he said.

He noted that the central bank’s Monetary Policy Committee (MPC) was going to meet on July 7, adding that the policy rate was expected to increase. Due to this, banks are forward booking dollars, which is weakening the rupee, he said.

It is hoped that the IMF loan programme will resume after the MPC’s announcement, he said, adding that it would stabilise the rupee.

Head of Research at Tresmark, Komal Mansoor, simply said: “Outflows before Eid holidays weakened the rupee.”

Director of Mettis Global, a web-based financial data and analytics portal, Saad Bin Naseer attributed the rupee’s fall to “pre-emptive demand from importers ahead of the Eid holidays”.