The rupee posted modest gains this week, as multiple data releases painted a positive economic picture for the country.
The rupee gained 29 paisas against the greenback in the interbank market, as healthy dollar inflows because of rising investment inflows, contraction in the current account deficit and strong foreign exchange reserves position helped strengthen the rupee value in the outgoing week.
The global credit rating agency Fitch affirmed Pakistan’s long-term foreign currency, which also improved market sentiment.
The rupee closed at 154.85 against the greenback on Monday, compared with the previous closing of 154.83.
On Tuesday, the local currency maintained its overnight levels, but on Wednesday, it closed higher at 154.77 to the dollar.
The rupee closed at 154.66 to the dollar on Thursday.
It concluded the week by trading at 154.56 against the greenback.
Dealers expect the current gains in the local unit to continue in the coming sessions. A weekly report issued by Tresmark,
an application that tracks financial market, said Pakistan attracted foreign investment of over $500 million in Treasury bills this week.
This takes the total Special Convertible Rupee Account (SCRA) share in bonds to a whopping $2.2 billion.
The huge inflows strengthened the rupee, which was also aided by the foreign direct investment inflows from telecos licence payments, the report said.
“[Forex] reserves went up by a mere $82 million and it will be important to see the reserves position coming Thursday, because if the central bank doesn’t utilise the excess dollars to build reserves, the rupee could strengthen all the way to 152/dollar in just a few weeks,” it said.
Pakistan’s current account deficit narrowed 75 percent to $2.153 billion in the first six months of the current fiscal year, helped by lower imports and increased exports.
Foreign direct investment into Pakistan surged 68.3 percent to $1.340 billion in July-December FY20. The foreign exchange reserves held by the State Bank of Pakistan rose to $11.586 billion as of January 10 from $11.503 a week ago.