Rupee expected to remain stable

KARACHI: The rupee is expected to remain stable in the coming week, supported by inflows from remittances and exports, currency dealers said on Saturday.

The dollar settled at Rs278.71 at the end of the week, slightly higher than the previous week’s closing level of Rs278.58.

Analysts attributed this stability to the $538 million current account (CA) surplus and a $20 billion long-term partnership with the World Bank, which are bolstering confidence in the short term.

“A slight deterioration in the real effective exchange rate (REER) is unlikely to impact the rupee significantly at current levels. With inflation near its lows, REER does not pose a substantial risk in the near future,” they added.

They also noted that a small but noteworthy increase in premiums had encouraged exporters to sell forward contracts. However, the broader market remains cautious, awaiting better rates. Premiums for one-, two- and three-month contracts were recorded at 130, 200, and 300 paisa, respectively.

The improvement in economic fundamentals, such as growth in exports and remittances, has been a key factor in supporting the rupee against the dollar, resulting in the current account surplus.

During the first half of the current fiscal year, the country posted a current account surplus of $1,210 million, compared to a deficit of $1,397 million during the same period last year.