Rupee likely to bounce back

The rupee suffered minor losses against the dollar in the local currency market during the outgoing week amid a pickup in the dollar demand.

During the week, the rupee lost 11 paisas against the dollar in the interbank dealings and nine paisas in the open market.

The rupee commenced the week by trading flat at 123.93 against the prior week’s closing level of 123.92. The local unit gained grounds in the second trading session as it rose to 123.71.

The rupee closed higher at 123.53/dollar on Thursday supported by positive investor sentiment, political stability and expectations of foreign inflows from bilateral sources and multilateral donors. However, the rupee lost rising momentum to end weaker at 124.04 to the dollar on Friday, amid fresh surge in the dollar demand from importers.

The rupee traded in the range of 121.70 and 122.60 against the dollar in the kerb market during the week.

Traders expect the domestic currency to bounce back next week in anticipation of routine dollar demand and bullish sentiments in the financial markets. “We see the rupee will trade at 123.90/95 in the coming week,” a trader said.

However, weak data on the foreign exchange reserves, direct investment and external debt issued by the central bank, sparked concerns over the outlook for the external sector.

Pakistan’s foreign exchange reserves fell to $16.712 billion during the week ended August 10 from $17.005 billion in the previous week. The forex reserves held by the State Bank of Pakistan decreased $216 million to $10.153 billion due to external debt servicing and other official payments.

The country’s external debt and liabilities rose 13.98 percent to $95.097 billion at the end of June. Foreign direct investment into Pakistan in July fell 45.2 percent year-on-year to $128.1 million.