Rupee may remain range-bound

The rupee is expected to maintain the current levels against the dollar next week in the wake of dull sentiments, dealers said.

The currency pair remained fairly range-bound during the outgoing week with some dollar demand seen from importers.

“There is no trigger in the forex market. Therefore, we expect a range of 110.50 to 110.55 to hold in the interbank market next week,” a currency dealer said.

“A soft foreign exchange demand contributed to exchange rate stability in the interbank.”

The rupee commenced the week at 110.55 against the greenback, owing to the normal dollar demand from importers. The domestic currency gained single paisa, with trading at 110.54 on Tuesday. It continued to see a range-bound trading session on Wednesday, as it closed unchanged at 110.54.

The rupee stayed flat at 110.53 against the dollar till the last closing day of the week.

The exchange rate remained stable. However, a persistent decline in the foreign exchange reserves remains a source of concern for many investors.

In the open market, the rupee continued to trade in the narrow range of 111.80/90 to 112.20 for buying and selling, amid smooth dollar supplies.

The country’s foreign exchange reserves dropped to $19.771 billion as of January 12 from $20 billion a week ago.

The central bank’s foreign exchange reserves fell $284 million to $13.699 billion during the week ended January 12.

A widening current account deficit also puts pressure on the underlying balance of payments. Pakistan’s current account deficit rose 59 percent in the first half of the current fiscal year due to high import growth relative to exports.