Rupee likely to gain

The rupee made modest gains against the dollar during the outgoing week, boosted by increase in the country’s foreign exchange reserves; following inflows from the two Gulf countries.

The rupee started the week in the interbank market by trading unchanged at 138.83 against the dollar. However, it weakened to 138.93/dollar in the second trading session due to increased dollar demand from importers. The rupee stayed flat in the third session.

The rupee ended higher at 138.88 on Thursday. It closed the week by trading at 138.78/dollar.

In the open market, the local currency traded in the range of 139.20/139.40 against the greenback. It gained due to the incentive filled economic reform package announced during the week. Several sectors such as textiles, automobiles and banks benefited from this.

Moreover, the country received the third $1 billion installment from Saudi Arabia of the agreed $3 billion. Similarly, the United Arab Emirates placed $1 billion in the State Bank of Pakistan on Friday.

Analysts said the combined $2 billion in deposits will help increase Pakistan’s foreign exchange reserves to $15.2 billion, while it will ease pressure on the balance of payments position.

Traders said the recent bilateral inflows will have positive implications on the currency.

“The rupee is likely to appreciate a little, as markets expect the latest tranches received from Saudi Arabia and the UAE to provide the balance of payments some relief,” a trader said.

“The currency appears to be trading at 138.50/138.60/dollar next week.”