Sunday Apr 04, 2021
KARACHI: Traders expect the Pakistani rupee to remain range-bound against the US Dollar next week, as inflows from remittances and Roshan Digital Account (RDA) are expected to meet importers’ demand, The News reported on Sunday.
The rupee started the week at 154.04 against the Dollar.
Surprising all traders by an abrupt fluctuation in the currency, the Rupee broke all anticipated support levels, racing past pre-Covid levels, gaining 0.8% to 152.76 in a couple of days.
However, the upward trend didn’t stay for long and lost the 152 level.
Commenting about the prediction for the coming week, a forex dealer said: “We foresee a stable rupee in the coming week helped by strong remittances and increased inflows into RDA. Higher foreign exchange reserves and persistent recovery in exports will help hold the rupee steady against the greenback."
“The Rupee is seeing some consolidation after it broke the 153 level on Wednesday. We think this [consolidation] will continue. The local unit is poised to retest 153 levels before we see any reversal,” he added.
The Rupee closed the week at 153.55/dollar. Some traders were convinced there was the central bank intervention, and also added that it was long overdue.
Analysts believe the current account has seen outflows for the last three consecutive months since RDA and remittances have been up.
A $2.5 billion pick up on Eurobonds at around 7% would be used to repay $3 billion of maturing debt before June end.
The fiscal deficit is around 8% of gross domestic product, while the trade deficit clocked in at a huge $3 billion. What is worrying is that GDP growth is almost stagnant (1.%), it said.
Fortunately, there was some alarm in government quarters by this sudden surge. The prime minister’s new economic team has preferred a stable currency along with economic reforms.
“Traders are still looking for direction from the SBP [State Bank of Pakistan] to make their FX strategy. While some sense of intervention was seen last week, no one can predict whether this was a floor for USD/PKR or a breather,” it said.
Overseas Pakistanis deposited $212 million in RDA in March taking the total deposited amount to $806 million.
The country’s forex reserves increased 1.96% to $20.836 billion as of March 26.
Exports increased 7% to $18.669 billion in July-March FY2021.
On interest rates, traders quickly gave up hope of a rise in interest rates as COVID cases are reaching new peaks, and 10-year Pakistan Investment Bonds easing to 10.38%, while the vaccination programme is underway, the fresh lockdowns will force the SBP’s Monetary Policy Committee to maintain an accommodative policy for the remainder of the year.