Sunday Feb 28, 2021
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.
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.”
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.