Rupee stable

The rupee may stay stable during next week owing to sharp fall in current account deficit and government measures against dollar flight.

Domestic currency gained a total of 17 paisas against the dollar during the outgoing week (October 14-18) in the interbank foreign exchange market.

The appreciation in rupee value could be attributed to the government initiatives against dollar hoarding.

Tax authorities have launched scrutiny against persons purchasing dollars for various purposes.

Besides, the SBP issued framework for prevention of trade-based money laundering.

Through the framework the commercial banks have been directed to ensure customers’ due diligence, as well as to know their customers while approving payments against trade forms.

Further, the central bank also asked the banks to identify the persons whom their customers were dealing with in exports or imports.

During the outgoing week the statement of International Monetary Fund (IMF) regarding exchange rate in Pakistan also helped the local unit to appreciate.

The IMF officials at a press conference on October 15 stated on Pakistan: “We now have an exchange rate that is more reflecting actual economic conditions, with some degree of floating.”

The interbank foreign exchange market started the week at Rs156.07 to the dollar and closed at Rs155.90 on October 18, 2019.

The current account deficit of the country fell sharply by 64 percent during the first quarter of the current fiscal year to $1.546 billion as compared with the deficit of $4.287 billion in the same period of the last fiscal year.

Current account deficit narrowed to $259 million in September 2019 compared to $610 million in August 2019 and $1.278 billion in September 2018.

Analysts said the massive contraction in the current account deficit was due to narrowed trade deficit.

Trade deficit contracted 35 percent to $5.72 billion in the July-September period with import sharply falling 21 percent to $11.25 billion.

This significant fall in current account deficit would improve the sentiments in the currency market.