KARACHI: The rupee declined, closing at 278.97 against the dollar in the interbank market on Thursday, a decrease from 278.87 in the previous trading session.

In the open market, the rupee remained stable, trading at 280.82 per dollar.

Dealers said that the local currency relinquished its previous session gains due to increased dollar demand from importers in response to a pickup in economic activity.

Moreover, reports indicate that the United States has suspended aid to Pakistan, halting significant projects in key sectors due to a directive from the Trump administration to reassess and realign US foreign assistance, which adversely affected investor sentiment.

According to official data, the US grants make up a small portion of external funding for Pakistan.

Total grants budgeted for FY25 amount to $176 million, representing 1.0 per cent of the total external funding target of $19.34 billion. Notably, the country received $38.3 million in grants from the US during the five months of this fiscal year, surpassing the budgeted allocation of $21 million for FY25. No bilateral loan allocations from the US are budgeted for FY25.