The rupee extended its losing streak against the dollar in the interbank market on Friday, as importers’ demand for the greenback outpaced exporters’ supply.

The rupee closed at 280.57 per dollar, down 0.17 percent from its previous close of 280.09. The currency has depreciated by 1.4 percent in the past five trading sessions. However, the rupee gained some ground in the open market, where it rose by 50 paise to 281.50 per dollar, according to the Exchange Companies Association of Pakistan (ECAP).A currency dealer said that the rupee was under pressure due to the mismatch between the dollar inflows and outflows in the market. He also cited the decline in the central bank’s foreign exchange reserves as a negative factor for the rupee.The State Bank of Pakistan’s foreign exchange reserves fell by $220 million to $7.5 billion in the week ending October 20, as the country repaid its external obligations.”We saw that importers were the primary driver of demand, but exporters’ dollar sales inflows were insufficient to cover importers’ requirements,” the dealer said. “The central bank has also been buying dollars from the market to boost its reserves and service debt.”Analysts said the central bank has been a frequent buyer of dollars from the interbank market since it entered into a $3 billion loan program with the International Monetary Fund (IMF) in July.The IMF program requires Pakistan to maintain a market-determined exchange rate and build up its reserves. According to dealers, the rupee is likely to trade in narrow ranges until the conclusion of the first review of the IMF program, which is expected to start in early November.The review will assess Pakistan’s progress on meeting the IMF’s targets on fiscal consolidation, monetary policy, structural reforms and social protection. Goldman Sachs Group Inc. viewed that the rupee’s recent appreciation, which made it one of the best-performing currencies in the world over the last two months, would be short-lived.”The recent appreciation of the Pakistani rupee will likely be short-lived, given soaring interest costs and only short-term arrangements with the IMF and bilateral financing to support the external balance,” Goldman analysts led by Kamakshya Trivedi wrote in a report.”The market will continue to require a premium for Pakistan’s rupee ahead of elections.” The rupee has appreciated by 2.55 percent against the dollar so far this month. The currency has also gained 1.93 percent since the start of the fiscal year in July, according to data from Arif Habib Limited.

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