KARACHI: The Pakistani rupee remained steady against the US dollar in the interbank market on Monday owing to lukewarm demand for the greenback, while dealers are not upbeat on a strong recovery until foreign exchange reserves are replenished.
The rupee finished at 223.95 to the dollar compared to its Friday's close of 223.94 in the interbank market.
Analysts believe it was a result of negative sentiment that was fanned by the shrinking dollar stash of the country.
However, the local unit is likely to bounce back later this week on expected inflows from the Asian Infrastructure Investment Bank (AIIB).
The Pakistan Business Council (PBC) in a note posted on their Twitter handle stated that expecting the Pakistani rupee to defy gravity (in view of depleting forex position) is unrealistic.
“Bolstering rupee through administrative controls renders exports less competitive and imports (even curbed), cheaper. Where is the sense in this when we want the reverse — higher exports?” it said.
Tresmark weekly client note stated that the State Bank of Pakistan (SBP) is expecting external flows from multilateral (such as World Bank, Asian Development Bank, AIIB and others), bilateral and other sources.
However, contrary to the dominant opinion, the platform for treasury markets said that despite some positives, the rupee weakening doesn’t seem to end soon.
The rupee/dollar parity could test previous highs if the pressure on the forex reserves is not eased, it noted.