Rupee expected to remain stable next week

KARACHI: The rupee-dollar exchange rate is expected to remain stable next week following encouraging developments regarding Pakistan’s International Monetary Fund (IMF) programme, dealers said.

The dollar closed at Rs280.26 in the outgoing week, compared to Rs280.22 a week earlier in the interbank market, gaining four paisas on a weekly basis. Dealers project the dollar to remain around Rs280.25 in the coming week.

During the week, the dollar remained above the Rs280 level due to import payment pressure, despite support from the real effective exchange rate (REER). The rupee’s REER index declined by 1.71 per cent in February 2025 to a provisional value of 102.27, compared to 104.06 in January 2025.

The rupee also received support from rising yields, which increased by 5-25 basis points (bps). The State Bank of Pakistan (SBP) conducted an auction during the week, selling Market Treasury Bills (MTBs) worth Rs392.17 billion against a target of Rs800 billion, while the maturity amount stood at Rs513 billion. The central bank sold two-, five-, and ten-year semi-annual bonds worth Rs762.33 billion, surpassing the Rs425 billion target.

Foreign exchange reserves also provided some support to the rupee, as SBP-held reserves increased by $48.9 million (0.44 per cent WoW) to $11.15 billion.

Dealers noted that while import payment pressure weighed on the rupee, support from multiple factors helped stabilise the currency.

However, economic indicators remained mixed. The current account posted a deficit of $12 million in February 2025, compared to $399 million in the previous month. Similarly, foreign direct investment (FDI) stood at $94.7 million in February 2025, down from $172 million in the same period last year.

Despite some positive developments, the rupee remained largely range-bound. “The market will be closely watching IMF-related news for further direction on the rupee-dollar parity,” dealers said.