Rupee to weaken further

The rupee strengthened its value against the dollar in the foreign exchange market during the outgoing week amid robust remittance flows ahead of Eid-ul-Azha due on Monday.

The currency continued to appreciate despite rising political noise, which includes tensions between India and Pakistan and arrest of top leadership of Pakistan Muslim League Nawaz.

In the first trading session, the rupee closed at 158.93 against the dollar, compared with Friday’s closing of 159.11.

The currency extended gains into the second session to close at 158.65 to the dollar helped by continued inflows of remittances.

The rupee gained 40 paisas to end at 158.25 against the greenback on Wednesday. However, the currency traded firmer versus the dollar on Thursday.

The rupee ended lower on Friday due to demand for the dollar from importers to pay for their purchases before the Eid-ul-Azha holidays.

The rupee traded in the ranges of 158.90 to 159.50 against the dollar in the open market.

A downside pressure on the rupee could be seen after the market opens on next Friday

Dealers expect the rupee to weaken further to 160 against the dollar in coming sessions due to the lack of support from the remittance flows.

Investors’ sentiment to remain cautious because of the tensions between Pakistan and India on Kashmir, they said.

Pakistan downgraded diplomatic relations with India and suspended all bilateral trade.

The government has announced that it would take the matter of India revoking the special status for occupied Kashmir to the United Nations Security Council.

Pakistan’s foreign exchange reserves fell to $15.020 billion during the week ended August 2 from $15.061 billion in the previous week, data issued by the central bank showed.

The foreign exchange reserves held by the State Bank of Pakistan also dropped to $7.729 billion from $7.767 billion.

Pakistan’s remittances from

workers abroad increased 24 percent to $2.039 billion in the first month of the current fiscal year from $1.645 billion in the previous month.

However, July remittances were slightly higher as compared to the corresponding period of the last year, when Pakistani expatriates sent home $1.981 billion.