The rupee climbed to its six-month high against the dollar in the outgoing week, and dealers said the currency could gain more in days ahead.
A loan disbursement from the Asian Development Bank, strong foreign exchange reserves position, and improved economic outlook were the reasons for the rise in the rupee’s value this week.
On Monday, the rupee closed at 154.96 to the dollar in the interbank market, the highest since June this year. It had ended at 155.06/dollar in the previous session.
The local unit continued in a range-bound trading pattern, and traded in the band of 154.96 and 154.98 throughout five sessions.
In the open market, the rupee gained 20 paisas to close at 154.70/dollar on Tuesday. It remained stable at this level during the week.
“It seems there are no major import payment flows next week,” said a dealer. “We see a slight gain in the currency against the dollar in the coming week due to expected inflows from the International Monetary Fund (IMF).”
The IMF’s board and Pakistani authorities are scheduled to meet to discuss the first review on Thursday, which will pave the way for the disbursement of the second tranche worth $450 million under its three-year loan programme.
Dealers said the rupee was likely to appreciate to 153.50-154 against the dollar by the end of this month.
Pakistan has to repay approximately $168 million debt to the IMF against its Extended Fund Facility (EFF) this month.
However, the debt repayment to the IMF was unlikely to put pressure on the currency due to the stable foreign exchange reserves.
Ahead of the IMF executive board meeting with Pakistani authorities, IMF spokesman Gerry Rice said the fund’s board would meet on December 19 to discuss the first quarterly review conducted in November by the staff for preliminary assessment.
“What that indicates is that all prior actions and performance criteria under the program with Pakistan have been met,” Rice told late on Thursday a regular news briefing available online. “And that the financing assurances needed for the program to go forward are in place.”
The country bagged the first tranche of $991.4 million under the $6 billion extended fund facility in July. Pakistan’s bright economic outlook could push the rupee higher in the near- to medium-term.