Rupee may stay firm

The rupee posted modest gains against the dollar, amid last week’s economic reform package in which the country received cash deposits of $1 billion each from the UAE and Saudi Arabia.

The rupee gained 50 paisas in the interbank market during the week. It closed at 138.74 against the greenback on Monday, while finished at 138.23 on Friday. The rupee hovered in the range of 138.50/138.70 against the greenback in the open market.

Traders expect the rupee to trade in narrow range over the next week. It is likely to hover in the ranges of 138.23/138.25.dollar.

The dollar demand from importers remained dull. However, some positive news on the external sector front aided gains to the currency during the week under review.

Foreign exchange reserves held by the State Bank of Pakistan climbed $1.52 billion to $8.15 billion during the week ended January 25.

After consistent dwindling, the recent increase came after inflows of $1 billion each from Saudi Arabia and the UAE were deposited with the central bank.

However, the SBP in its latest monetary policy statement said the financing of current account deficit, nevertheless, remained challenging, as the private (foreign direct investments and private loans) and official inflows were insufficient to completely finance the deficit. Thus, a significant part of it was managed by using the country’s own resources, which reduced the SBP’s net liquid foreign exchange reserves to $7.2 billion by the end of December 2018.