KARACHI: The rupee strengthened slightly against the dollar on Wednesday, supported by a sufficient supply of the greenback in the market, and traders expected the local currency to remain stable in the near term.
The rupee closed at 284.14 per dollar in the interbank market, compared with 284.38 on Tuesday, gaining 0.08 percent. In the open market, the rupee rose 25 paisas to 285 per dollar, according to the Exchange Companies Association of Pakistan.
Traders said the improved dollar inflows from exports and remittances helped ease the pressure on the rupee. “Since exports and remittance inflows let the rupee continue appreciating at a slower rate, there is no strain on the currency,” said a foreign exchange trader. “There doesn't seem to be any pressure on the rupee in the coming days, and itis expected to stay where it is until the end of December.”
To determine the short-term direction of the rupee, market participants will, however, need to wait for the State Bank of Pakistan's monetary policy announcement and the International Monetary Fund's executive board meeting, he said.
Although there is little chance of rate cuts at the December 12 monetary policy review meeting, there is a chance for a pleasant surprise. It will indicate the start of a rate cut cycle if it materialises.
The IMF is expected to approve the release of the next tranche of its $3 billion loan programme for Pakistan, which has helped bolster the country’s foreign exchange reserves and fiscal position.