Rupee may remain firm

The rupee is likely to remain largely range-bound over the next week due to the lack of market triggers, traders said.

“We don’t see a near-term volatility in the rupee. The currency will remain stuck in a range-bound trade,” a trader said.

“There is nothing unexpected that could alter the next week outlook for the rupee.” However, rising political tension and weak macroeconomic fundamentals continue to weigh on investors' sentiment, he said.

The rupee traded in tight ranges of 138.93/94 against the greenback during the outgoing week in the interbank market. In the same way, it hovered at 139.20/40 against the dollar in the kerb dealings.

The depleting foreign exchange reserves puts pressure on the exchange rate. The local currency had weakened almost 29 percent since December 2017. The central bank’s foreign exchange reserves dropped to $7.457 billion during the week ended December 21, pressured by increased foreign debt repayments, while the central bank’s forex reserves stood at $8.078 billion in the previous week.

Total liquid foreign exchange reserves held by the country dropped to $14.017 billion from $14.584 billion in the previous week.

The forex reserves held by commercial banks stood at $6.560 billion, compared with $6.536 billion in the preceding week.

The International Monetary Fund is concerned about the debt payment capacity of Pakistan, saying it will assess the debt sustainability profile of the country before sanction of new loans.