Rupee may stay firm

The rupee suffered losses against the dollar in the currency market during the outgoing week on the back of increased dollar demand and negative sentiments among investors about foreign inflows.

In the interbank market, the rupee on Monday lost 26 paisas, trading against dollar at 138.80, lower than the last closing at 138.54. The renewed payments pressures weighed on the currency.

The rupee depicted a little variation and closed at 138.82/dollar on Tuesday due to improvement in dollar supplies. In the following session, the rupee was stuck in a range-bound trading pattern. It ended at 138.81 against the greenback.

The rupee breached the barrier of 138 and closed at 139.18 against the dollar on Thursday. It closed the week at 139.27/dollar.

In the open market, the rupee traded at 139/139.40 against the dollar during the week.

Investors were optimistic about foreign financial inflows. Finance Minister Asad Umar last week said that Pakistan would receive around $1.4 billion inflows in the next two weeks after which the central bank’s foreign exchange reserves will rise to over $12 billion.

Improved sentiment over rupee and the foreign currency reserves was also reflected in the second and third trading session, as the central bank received $1 billion from the United Arab Emirates.

The State Bank of Pakistan (SBP) last week signed an agreement with Abu Dhabi Fund for Development (ADFD) for the placement of the second tranche of $2 billion.

The first tranche of $1 billion of the $3 billion UAE’s financial assistance was received in January 2019.

The ADFD, in January, committed $3 billion through a deposit into the State Bank’s accounts.

The local unit came under pressure in the last two sessions due to rise in the dollar demand. Moreover, the finance minister disclosed that Pakistan was not been able to get $3.2 billion oil on deferred payment facility from the United Arab Emirates.

The rupee is expected to remain range-bound over the next week. However, any news from the IMF on bailout package for the country will send a positive signal to the investors.

The government and the International Monetary Fund are expected to take any decision on the bailout package in the next couple of weeks.

The IMF mission chief is expected to visit the country on March 26. The country’s foreign exchange reserves rose to $14.965 billion during the week ended March 8 from $14.956 billion in the previous week.