Rupee may extend losses

The rupee is likely to extend losses next week, driven by weak macroeconomic fundamentals and expectations of a further fall to meet the IMF demand for more flexible exchange rate, analysts said.

The rupee will breach the 133 level and weaken to 134 in the coming week, as most analysts expected.

“The IMF mission’s visit to Pakistan will keep up the downward pressure on the currency. The government also seems to boost exports and lower the imports by depreciating the rupee,” an analyst said.

The IMF technical team has been in Pakistan since November 7 to hold negotiations for a possible $6 billion to $7 billion new bailout package.

In the interbank market, the rupee depreciated 1.04 percent to 133.85 against the dollar during the outgoing week.

The local unit lost more than a rupee in the five trading sessions. It closed at 132 to the greenback on Monday, while settled weaker at 133.20 on Friday. The decline in the rupee in the week was led by higher import payments and bearish investor sentiment.

“It is difficult to project daily trend. I reckon it [rupee] may pause at 135,” said Fawad Khan, the director of research and business development at BMA Capital.

“The rupee should depreciate further to around 140 early in the first quarter of 2019.”

Pakistan’s foreign exchange reserves continue to deplete due to rising foreign debt repayments.

The central bank’s foreign exchange reserves dropped $98 million to $7.679 billion in the week ended on November 2.