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Sunday Feb 28 2021
By
Web Desk

Pakistani rupee likely to strengthen marginally against US dollar next week: report

By
Web Desk
A trader counting currency notes.
  • The local currency gained around Re1 or 0.60% during the outgoing week.
  • Dealers expect the rupee to trade below 158 levels in the coming week.
  • The central bank is likely to step in to mop up excess dollar liquidity, Tresmark said.


KARACHI: The Pakistani rupee is likely to strengthen marginally against the dollar next week due to increased dollar inflows from the Pakistani expatriates and positive sentiments regarding the economy.

According to a The News analysis, markets expected that the rupee would appreciate materially following the announcement of the Financial Action Task Force (FATF) that it would keep Pakistan on its grey list until June 2021.

However, the dollar found strong bids at 158.10 and later the rupee which had started the trade at 158.45, closed at 158.10/dollar on Friday.

The local currency gained around Re1 or 0.60% during the outgoing week.

Read more: Pakistan's current account deficit declines to $229m in January

The FATF has appreciated Pakistan for the significant progress made on the entire action plan and granted another four-month period to complete the agenda.

“The outlook is that we see the rupee to appreciate slightly in the near-term view from next week to the end of next month (March) due to better than expected Roshan Digital Account (RDA) inflows, increasing remittances and positive economic developments,” a currency dealer at one commercial bank told the newspaper.

“There is excess supply and falling demand for the dollar in the market,” he added. “We expect the rupee to trade below 158 levels in the coming week. For the next month, the trading range is expected to be 157 to 157.50.”

Read more: World Bank to highlight SBP's 'Banking on Equality' policy on Tuesday

Exporters were nervous by a steady slide in the value of dollar, said a Tresmark in a note to its client.

“Exporters in the textile industry (the backbone of the export segment) are already battered with sharp increase in cotton and yarn prices and a surge in utilities,” it said.

The State Bank of Pakistan is likely to step in to mop up excess dollar liquidity, Tresmark said, and added that it has done that before around the same 158 level, which was why analysts expected it would do so again.