Rupee expected to remain stable

Rupee is likely to remain stable against the US dollar next week as the central bank is expected to keep its interventions intact to support the local currency amid widening current account deficit, analysts said.

“Rupee is expected to hover at 110.55/57 in the coming week,” an analyst said.

“However, the State Bank could make some exchange rate adjustment [currency depreciation] in the last quarter of the current fiscal year to curb mounting pressure on the external sector.”

Analysts are expecting rupee depreciation by 5-7 percent till end of the current fiscal year 2018. Rupee depreciated five percent in December last year.

Rupee held steady at 110.57 against the US dollar in the interbank market for much of the outgoing week.

Pakistan’s current account deficit widened 48 percent to $9.156 billion during the July-January period of 2017/18.

Lack of market triggers and insignificant dollar demand helped the local unit trade at a relatively stable note. The market didn’t see any increase in outflows as no major payments were due by the importers during the week.

Traders, however, believed that the ongoing stability in the currency is due to the foreign exchange interventions of the central bank.

The country’s foreign exchange reserves continued to decline.

The State Bank of Pakistan’s foreign currency reserves shrank to $12.126 billion on March 9 from $12.233 billion a week ago.

In the open market, rupee managed to post minor gains due to smooth supply of the greenback. It quoted at 111.50/111.70 and 111.40/111.70 for buying and selling against the dollar during the outgoing week.