Rupee remains stable against US dollar

• Rupee value remains unchanged at Rs170.8 against the US dollar in the inter-bank market on Tuesday.
• “We see a downward trend in the rupee to continue in the days ahead,” says a currency dealer.
• Outlook for the rupee will remain bearish because of the widening current account deficit.
  

KARACHI: The rupee remained stable against the US dollar at Rs170.8 in the inter-bank market on Tuesday compared with Monday's close of Rs170.79, according to the State Bank of Pakistan (SBP).

The local currency dropped to an all-time low of Rs170.79 as import payments climbed.

Earlier, Pakistan-Kuwait Head of Research Samiullah Tariq said: “The rupee is under pressure as demand is higher than supply.”

“Demand is high due to the trade deficit, which is rising on the back of commodity prices. The situation in Afghanistan has also increased demand,” Tariq added.

Some analysts had also said that the pressure on the rupee is coming from speculators and hoarders.

They said the outlook for the rupee will remain bearish because of the widening current account deficit as increasing global commodity prices could add to import costs and stock inflation as well.

“We see a downward trend in the rupee to continue in the days ahead,” said a currency dealer.

However, Tariq had predicted that the direction of currency will be prominent during a period of two weeks as it depends on how the IMF negotiations evolve next week.

Staff-level discussions between Pakistan and the International Monetary Fund (IMF) began on Monday, while Minister for Finance Shaukat Tarin is scheduled to attend annual meetings of the World Bank and the IMF from October 11-17 in Washington.

Successful negotiations will pave the way for the release of $1 billion in disbursements from the IMF and also help support the rupee in the months ahead.