Dollar gains ground as rupee remains under pressure

• Rupee closes at 221.42 in interbank market.
• Local unit loses 1.56 against greenback.
• Floods will dent sentiment on the rupee.

KARACHI: The Pakistan rupee continued to remain under pressure Tuesday and depreciated against the dollar in the interbank market following a fluctuation in the demand and supply position of the greenback in the currency market.

The local unit closed at 221.42 after losing 1.54 against the dollar in the interbank market, up from yesterday's close of 219.86, according to data released by the State Bank of Pakistan (SBP).

Traders and dealers had expected the rupee to trade within a range of 218-19 in the coming days.

The currency move during the week will be influenced by importer demand and inflows [supplies] from exporters and remitters.

Last week, the currency largely remained stable as the market sighed in relief when a $1.16 billion loan tranche arrived after International Monetary Fund (IMF) revived a bailout package for a cash-strapped country.

However, the economic fallout from the devastating floods in the country and skyrocketing inflation will dent sentiment on the rupee.

The rupee’s movement in the open market also grabbed attention as the spread narrowed with rates in the interbank.

Analysts expect the rupee to come under some pressure as Pakistan moves to import a higher amount of essential commodities in the wake of floods in the country.

However, many also believe that the demand could be suppressed, keeping the current account balance in check.