Rupee remains stable against US dollar

KARACHI: The Pakistani rupee remained stable against the US dollar in the interbank market on Tuesday amid matching demand and supply of the greenback.

Data released by the State Bank of Pakistan (SBP) showed that the local unit closed at 221.65 against the dollar compared to Monday’s close of 221.66.

Currency dealers believe there was dollar demand from importers, but inflows were adequate to meet that demand.

A positive sentiment after Saudi Arabia and China promised Pakistan $13 billion in financing also supported the local unit, the dealer added. “We expect the rupee to sustain its current upward momentum in the coming days.”

China has agreed to refinance another $3.3 billion in commercial bank borrowings, increase the currency swap facility by up to $1.45 billion, and roll over $4 billion in sovereign loans to the South Asian country as a result of Prime Minister Shahbaz Sharif's recent visit to Beijing.

The forward swaps are in the positive range, indicating sufficient forex liquidity, according to analysts. Last week Pakistan and China signed a memorandum of understanding on setting up RMB (Chinese currency) clearing arrangements in Pakistan.

The country is expected to receive inflows from international financial institutions. The World Bank has promised Pakistan $2.5 billion in flood aid.

It should also be noted that the State Bank will remain closed tomorrow on account of Iqbal Day.