Sunday Apr 11, 2021
KARACHI: Ahead of the holy month of Ramazan, dealers expect the Pakistani rupee to trade stable against the dollar in the coming week helped by strong remittance inflows amid importers’ waning appetite for hard currency, The News reported on Sunday.
The rupee gained 72 paisas or 0.46% against the dollar in the interbank market this week. The local unit closed at 153.66 to the dollar on Monday.
However, persistent lower import payments and better inflows helped the rupee conclude the week at 152.94 per dollar.
A currency dealer at a commercial bank said: “Next week, I think because most importers are reluctant to get forward booking owing to the rising coronavirus cases in the country, there won’t be much demand in the market and we may see the rupee to hold steady or strengthen just a little bit."
The trader opined that increasing dollar inflows in the form of remittances from Pakistani workers employed abroad with the approach of the fasting month of Ramazan (to be commenced from next week) will contribute.
“We expect the rupee to trade 152. 60 to 153.20 per dollar in the coming days,” said another trader.
The local currency was also supported by the boost in the foreign exchange reserves following the proceeds of Eurobonds issuance.
The State Bank of Pakistan has received the proceeds of the government's $2.5 billion Eurobond issuance in its account.
As a result, SBP’s foreign exchange reserves closed above $16 billion, their highest level since July 2017. The country’s reserves fell to $20.679 billion as of April 02, from $20.836 billion in the previous week.
The reserves held by the central bank decreased $146 million to $13.527 billion, due to external debt repayments.
The International Monetary Fund (IMF) in its country report published this week, said the SBP remains committed to a market-determined exchange rate and further accumulating reserves.
This remains crucial to absorb external shocks, maintain competitiveness and current account sustainability, and build adequate reserve buffers.
IMF said that going forward, the authorities will continue to use purchases in the FX interbank market to rebuild reserve buffers amid favourable market conditions, but not to influence exchange rate trends; and limit sales to only offset disorderly market conditions.
Despite some easing of existing exchange restrictions and multiple currency practices (MCP), further extension of those remaining is needed.
“The authorities have made progress in easing them but request more time to remove them fully when BOP [Balance of Payments] conditions permit and within the program period,” said the report.