KARACHI: The rupee is likely to trade range-bound in the coming week in line with thematching demand and supply of the dollar, however, it may recover some ground onpositive news of inflows from friendly countries, The News reported Sunday.
On Monday, the rupee ended at 223.91 per dollar, while the currency closed at 224.40 on Friday. It fell by 0.21 percent during the ongoing week.
“We expect trading to continue around current levels, with little fluctuations, unless we see any encouraging news from Saudi Arabia about its assistance,” said a currency dealer.
The country’s foreign reserves have declined to the lowest level in nearly four years with only enough to cover about a month of imports. The forex reserves held by the State Bank of Pakistan (SBP) fell $784 million to $6.7 billion as of December 2. With a sharp reduction in the reserves, the country struggles to meet external financing needs.
"We don't think the market will react too harshly to the dangerously low foreign exchange reserves as the central bank stepped up to allay concerns about the prospect of the country's default,” the dealer added.
“This will help ease uncertainty and speculation in the market,” he hoped.
In a recent podcast, SBP Governor Jameel Ahmad said Pakistan would continue to make timely loan payments while inflows were expected to increase significantly in the second half of the current fiscal year.
The SBP had repaid two commercial loans totalling $1.2 billion. The banks were expected to refinance the same amount, in the coming days, helping to raise the country’s foreign reserves, Ahmad stated.
“The government is also in talks with a friendly country for the disbursement of a $3 billion loan and negotiations with multilateral agencies are progressing, for further financial support,” he added.
The debt profile of Pakistan is composed of bilateral and multilateral creditors and only a small percentage is owed to foreign banks. “SBP has enough reserves to repay all obligations in an effective manner,” he claimed.
For the fiscal year 2023, around $33 billion have to be repaid to external stakeholders, including the current account deficit (CAD) of $10 billion and $23 billion in loan repayments. Out of the payable $23 billion external debt, Pakistan has already repaid more than $6 billion, according to the SBP’s governor.
“Besides this, a bilateral loan of $4 billion has been rolled over with the cooperation of relevant countries. Another $8.3 billion maturing obligations are expected to be rolled over as discussions are underway. The remaining outstanding repayment stands around $4.7 billion for the remainder of this fiscal year,” he said.
It includes $1.1 billion in commercial loans that have to be paid to foreign banks and $3.6 billion in multilateral loans. Pakistan has received foreign exchange inflows of $4 billion (excluding the rollovers of $4 billion).
Analysts said the interbank market largely remained range bound though there was action in the open market. There is a shortage of dollars in the kerb market.