Rupee to remain flat

KARACHI: The interbank currency market witnessed a steadier trend during the outgoing week amid easy availability of foreign exchange reserves with the banks, dealers said.

The rupee traded in the narrow range of 138.89 and 138.90 against the US dollar during the week. The currency, however, lost some grounds in the open market dealings. The rupee fell 0.28 percent to 140.10 in the week under review.

Traders said expect the rupee to remain range-bound, but it could be buoyed by investor expectation about foreign inflows.

“The rupee should hold in a 138 to 139 range for the rest of the coming week,” a dealer said. “The currency will move tracking demand and supply factors.”

The country on Friday received $1 billion tranche of a $3 billion Saudi bailout. Foreign exchange reserves of the State Bank of Pakistan jumped to $8.26 billion, following the inflows received from Saudi Arabia.

The reserves held by the central bank had dropped $242 million to $7.26 billion as of December 07.

Fitch Solutions, a research arm of Fitch Ratings, said Pakistan is unlikely to receive the $8 billion bailout package from the International Monetary Fund (IMF) by the next board meeting scheduled for January 15 as the lender wants the government to adopt stricter measures to address the country’s economic imbalances before sending the country’s case to its executive board.

“The rupee is likely to weaken further versus the dollar over the coming quarters, as the IMF would typically require the central bank to build up its foreign reserves buffers,” Fitch Solutions said in a report.