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Sunday Jun 13 2021
Web Desk

Currency update: Pakistani rupee to remain stable next week

Web Desk
Representational image. Photo: AFP

  • Rupee expected to hover around 157 against US dollar, say traders.
  • Foreign currency reserves, moderate dollar demand from importers and remittances to ensure rupee remains stable. 
  • Budget expected to be well-received by markets due to its focus on growth. 

The Pakistani rupee is expected to remain stable against the US dollar next week in the market, owing to hard currency supplies from remittances and export proceeds, said traders on Sunday. 

The sentiment on the rupee is likely to be bullish after the unveiling of a pro-growth and high-spending 2021/22 budget.

“We see the rupee to remain stable next week, supported by the foreign currency reserves, moderate dollar demand from importers and inflows from remittances, as well as exporters,” a trader in a commercial bank said.

The trader said that if the demand and supply of the currency remain stable, then the rupee will remain stable. However, if the outflows remain higher than the inflows, then the Pakistani currency may falter a bit. 

The budget is expected to be well-received by markets due to its focus on growth, no new taxes on the salaried class, and financial inclusion.

“The budget has positive implications for the rupee. A number of announcements, including the increasing target for the remittances from the overseas Pakistani workers is a rupee positive,” another trader said.

One of the key priorities of the government in the latest budget is to facilitate expatriate remittances and savings through the Roshan Digital Account, Pakistan Remittances Initiatives and other schemes.

The government’s target for workers' remittances is $31.5 billion for the fiscal year, starting July 1, 2021, compared with $29 billion estimated for FY2021.

Remittances from Pakistani workers abroad rose 33.5% to $2.5 billion in May. These inflows surged 29.4% to $26.7 billion in 11 months of this fiscal year.

The rupee saw a volatile session, falling 0.27% versus the greenback during the outgoing week. It opened the week at 155.31, closing lower at 155.92 on Thursday. Good dollar inflows and respite in the import payments pressure helped the local currency to close slightly higher at 155.74 against the dollar on Friday.

Analysts expect the rupee to hover at 157/dollar by the end of the current fiscal year. The domestic currency could reach 166 level in the upcoming fiscal year.

The Federal Budget 2021/22 is a growth-centric budget with the main focus on sustainable economic growth, pro-poor initiatives and social safety nets.

The government has made its intentions known to mitigate the adverse economic impacts of the pandemic, and has said it would continue its stimulus package. Authorities also intend to mobilise revenue without new taxes and increased development spending for more job creation.

Currency experts believed with the ease in the restrictions related to the coronavirus pandemic, the domestic demand would rise, which would increase the pressure for imported goods. This may increase the demand for the foreign currency.

Meanwhile, the local currency lost 43 paisas against the dollar during the week June 7 to 11, 2021.

Originally published in The News