Rupee may stay firm

The rupee is likely to maintain current levels next week after the government assurance over no deal on exchange rate with the International Monetary Fund.

The local currency fell sharply last week in the interbank foreign exchange market.

It lost 41 paisas against the greenback, as the foreign currency market initiated the week at Rs140.89 and ended the week at Rs141.30.

In a meeting with the Forex Association of Pakistan (FAP) on April 4, the State Bank of Pakistan (SBP) had said that the dollar gained the value due to large foreign payments last week.

The central bank assured that the dollar value would ease against the local currency in the coming days. But it said that with the higher demand for the greenback, the local unit would depreciate, but it would remain stable, as the demand would ease.

Currency experts, on the other hand, said that the conditionalities of the International Monetary Fund to free the exchange rate from any intervention would further devalue the local currency.

Analysts at Arif Habib Limited on April 5 projected that the local currency would hit record low of Rs147 against the dollar by the end of June this year.

The government is projecting trade deficit to be curtailed at $12 billion from the previous year’s $18 billion. Further, the current account deficit had already shown declining trend during the current fiscal year.

In the open market, the rupee also deteriorated sharply, owing to higher demand.

Experts said due to speculations artificial demand had been created for the greenback. The dollar buying in cash ready market reached Rs143 on April 5.

The Forex Association of Pakistan representatives held meeting with the State Bank of Pakistan for consecutive two days on April 4 and 5 due to sudden surge in the dollar value.

After the meeting with the State Bank of Pakistan, the Forex Association of Pakistan has decided to sell dollars only to bona fide buyers, who required dollars for education, health or Hajj and Umrah.

The ADB, in its latest report said the real gross domestic growth will fall to 3.9 percent in the current fiscal year.

In its assessment of Pakistan’s economy in the ‘Asian Development Outlook’ for 2019, it said until macroeconomic imbalances are alleviated, the outlook is for slower growth, higher inflation, pressure on currency and heavy external financing is needed to maintain even a minimal cushion of foreign exchange reserves.