Rupee may stay volatile

The rupee may not be able to sustain against the dollar during the start of the next fiscal year, owing to weak economic indicators and heavy debt repayments.

However, there may be respite for the local unit with the inflows under a bailout package, as the IMF board is likely to meet next week to review Pakistan’s loan programme.

The local currency lost over Rs3 during the week (June 24 to 28) to end at Rs160.05 against the dollar in interbank foreign exchange market.

During the outgoing week, the rupee fell to an all-time low of Rs164.06 against the greenback on June 27, following scheduled debt repayment, besides import and corporate payments.

During the outgoing fiscal year, the local currency fell sharply by 31.7 percent, as the exchange rate stood at Rs121.53 against the dollar on June 29, 2018 to the current level of Rs160.05 as of June 28, 2019.

Currency experts pointed out several reasons for deterioration of the local currency, of which the primary reason was quoted as over valuation and the IMF condition to allow market to decide the exchange rate.

The local currency would become more volatile after the staff level agreement with the IMF in the coming week, they said.

The market is not optimistic about the local unit during the coming weeks and there are speculations that the greenback may hit the high in between Rs180 and Rs190 by the end of this calendar year.

There are speculations that the rupee might settle around 180 to 190 levels by the end of this year.

But some also believe that the IMF loan programme may provide relief to the local currency.

Analysts at Topline Securities said the massive rupee fall affected many sectors of the economy and this was also reflected in the share market.

“(The) US dollar strengthened significantly by 14 percent in the last quarter against the local currency. During the last two years, the greenback gained approximately 53 percent against the Pakistani rupee,” they said.

The secondary currency market also followed the interbank market and witnessed massive depreciation in the rupee value.

Currency dealers said due to various conditions and monitoring for documentation of the economy, buyers prefer the US dollar as their safe investment.

The buying and selling of the dollar was recorded at Rs159.50/Rs161 in the open market as of June 28, 2019, compared with the closing of Rs162.50/Rs163.50 a day ago.