KARACHI: The rupee is expected to remain range-bound in the coming week due to dollar demand from importers, traders said.
This week, the local currency surpassed the 279 per dollar threshold in the interbank market, in line with dealers’ forecasts.
The local unit breached the 279 per dollar level in the interbank market this week in line with dealers’ expectations. On Monday, the rupee finished at 279.04 to the US dollar, and on Thursday, it dropped even lower to 279.14. On Friday, though, it recovered its losses and closed at 279.05. The markets were closed on Wednesday for the Kashmir Day holiday.
“The rupee is probably going to stay trading at its current levels, with fluctuations anticipated on both sides based on demand and supply factors,” a foreign exchange trader said.
“If the demand for dollars by importers surpasses the supply from exporter conversions and remittances, the rupee may see some pressure. Nevertheless, if inflows adequately satisfy the importers’ demand, the rupee will experience a modest appreciation, yet continue to trade around the 279 level next week,” the trader added.
The rise in the central bank’s foreign exchange reserves is also expected to maintain the rupee’s stability. The SBP’s forex reserves increased by $46 million to $11.418 billion in the week ending January 31. However, the country’s forex reserves decreased by $8 million to $16.044 billion, and the reserves of commercial banks fell by $54 million to $4.626 billion.
The ongoing improvement in the external account, supported by increased remittances and exports, and the SBP’s dollar buying from the currency market supported forex reserves.
Fitch Ratings said that Pakistan has made advancements in restoring economic stability and enhancing external buffers, forecasting economic growth at 3.0 per cent for the fiscal year 2025.
Progress on challenging structural reforms will be crucial for upcoming International Monetary Fund (IMF) loan programme reviews and sustained financing from other multilateral and bilateral lenders, according to a report by the global rating agency titled ‘Pakistan’s Progress on Structural Reform Remains Key to Credit Profile’ released on Thursday.