Rupee continues to sink against dollar, loses 1.16

• Rupee depreciates Rs1.16 against dollar. 
• Local currency closes at Rs220.87. 
• Analysts believed rupee will remain range-bound this week.

KARACHI: The Pakistan rupee continued to lose ground against the US dollar for the sixth consecutive session on Wednesday. 

According to the State Bank of Pakistan (SBP), the local currency closed at Rs220.87 after depreciating Rs1.16 or (0.53%) against the greenback. 

It closed at 219.71 a day earlier against the US dollar. 

Last week, analysts said that the rupee will trade range-bound in the ongoing week, depending on the demand for greenback by importers as the central bank has started to clear pending letters of credit.

Talking to Geo.tv, economist and former adviser to the federal ministry of finance Dr Khaqan Hassan Najeeb said the movement of a currency in a market-based exchange rate can be largely influenced by three factors — market sentiment, speculation and fundamentals.

“The rather disorderly movement that was seen in the rupee earlier all the way to 240 was partly sentiment and partly speculation,” the economist said.

“The exchange rate movement is likely to be more fundamentally driven dependent on dollar inflows and the foreign exchange reserves held by the state bank of Pakistan,” he said.

“At the same time managing the current account deficit is an important influence in the market-based exchange rate movement for coming months,” Khaqan said.