The dollar extended gains against the rupee to reach Rs279.8 in the interbank market on Monday amid increased demand for the greenback for the imports of raw materials, dealers said.

The demand for the greenback was on the rise after the government allowed the opening of letter-of-credit (LCs) for the imports of raw materials, said Exchange Companies Association of Pakistan (ECAP) Chairman Malik Bostan.

The local unit declined by Rs1.9 as the dollar hit Rs279.8 on Monday against the closing of Rs277.9 on Friday, according to the State Bank of Pakistan.

Bostan said that the gap between demand and supply of the dollar kept the local currency under pressure due to which the rupee recorded a decline, however, he was of the view that the foreign currency would decline after the demand was met for the imports.

The ECAP chairman added that the rupee would recover against the dollar after Pakistan secures funds from the International Monetary Fund under the Stand-by Arrangement. The dollar would “decline to Rs250 in the interbank” once Pakistan receives funds from the global lending institution, he added.

He said that a dip in overseas remittances, a major source for boosting the foreign exchange reserves of the country, was “not a good sign” for the economy.

Bostan discouraged the hoarding of the dollar, saying that those who bought the dollar for no reason would be bearing losses.

It merits here to mention that the central bank lifted all restrictions on imports on June 24, to fulfil one more condition of the IMF to unlock the funding under the stalled funding.

The central bank through a circular ended all restrictions on imports and granted permission to banks for providing remittances to release more than 6,000 containers. The SBP stated in the circular that remittances will be provided for all imports after the enforcement of the latest order.

PSX closes in green amid positive sentiments

A positive session was recorded in the Pakistan Stock Exchange as the benchmark KSE-100 Index added 377.8 points or 0.9% to close at 44,585.1 on Monday as compared with Friday’s closing, dealers said.

The increase in the benchmark Index was attributed to positive sentiments of the investors who opted to buy shares in the capital markets.