Rupee likely to stay range-bound

The rupee remained strong throughout the week as insignificant dollar demand and positive sentiments added to gains. The rupee ended at 124.22 against the dollar when trading commenced on Monday. But, it tracked mild gains, closing at 123.92 on Friday.

In the open market, the rupee continued to trade stronger. It closed at 123.50 to the greenback on Monday. It, however, concluded the week by trading at 122.50 against the dollar.

Investor sentiment remained bullish for most of the week on the prospects of fresh official inflows from a friendly country and the international financial institutions.

After China, Pakistan is likely to borrow more than $4 billion from the Saudi-backed Islamic Development Bank to curb the plummeting foreign reserves, according to reports.

Rise in the central bank’s foreign currency reserves and upward trend in the workers’ remittances helped the currency trade stronger during the outgoing week.

The State Bank’s foreign exchange reserves increased by $19 million to $10.369 billion during the week ended August 3.

Workers’ remittances sent by overseas Pakistanis rose 25.17 percent to $1.929 billion in July. Traders expect the local unit to continue range-bound trading with mild gains in the coming week. “The factors that have driven the gains so far are not expected to change over the next week.” a currency dealer said. “We see a little movement in the exchange rate next week. But what is crucial to watch is that whether the State Bank would let the rupee gain further and break the barrier of Rs123.94.”

Another dealer said, “The political uncertainty is out of the way. I think the rupee should stabilise around current levels, trading range-bound between 123.90/95 levels for now.” The only risk to this forecast is the IMF bailout getting delayed, he added.