Rupee may post gains

The rupee remained stable against the dollar with slight fluctuations during the outgoing week, as market participants seemed reluctant to take fresh positions.

The rupee traded in the range of 138.83/138.93 against the dollar in the interbank market.

Maintaining almost flat trend, the rupee hovered in the range of 139.20/139.30 against the greenback in the open market.

Demand for dollars from importers remained dull. Moreover, some positive news this week regarding the incentives for exporters and ease of doing business in the third budget of the current fiscal year, scheduled to be announced on Wednesday, lifted investors’ sentiment.

The government is likely to reduce or eliminate advance tax of 0.2 percent on brokers. It has also agreed to abolish withholding tax on cash transactions of over Rs50,000 for the tax filers.

The government is expected to ensure ease of doing business and reduce input costs for export-oriented sectors in the upcoming mini-budget. However, reports from international rating agencies and local polls painted a gloomy outlook for the economy.

Fitch Solutions warned Pakistan of larger economic distortions and greater pain in the future for seeking unconventional funding sources to avert the balance of payment crisis, and little appetite for austerity and economic reforms.

Economic Conditions Survey from the Association of Chartered Certified Accountants finds that the global poll of 3,800 accountants assessed Pakistan’s economy to be among the lowest in the South Asian region, as it continues to struggle with the macroeconomic imbalances.