Rupee seen firm

The rupee posted slight gains against the greenback during the outgoing week, amid fewer import payments and increased dollar supply.

In the interbank market, the rupee managed to gain 10 paisas versus the dollar.

The rupee started the week on a firmer note, losing one paisa against the dollar due to routine dollar demand from importers.

The local currency closed at 154.57 against the greenback, compared with the previous closing of 154.56.

The rupee continued a steady trend for the second and third trading sessions where it ended at 154.56/dollar.

It; however, showed some strength later in the week, helped by soft dollar demand from importers and positive sentiment. The rupee ended stronger at 154.47 against the greenback on Thursday.

The currency was stuck in range-bound trading for the last session on Friday, as it closed at 154.48 versus the greenback.

Dealers said the rupee was expected to remain range-bound in the coming sessions, adding that steady dollar inflows, in the form of remittances and foreign portfolio investment, are likely to help the local unit trade around the current levels.

The foreign exchange reserves of the State Bank of Pakistan increased $184 million to $11.9 billion as of January 24. These reserves were enough to cover 2.6 months of imports.

The SBP’s short liabilities fell $3.82 billion in the first six months of the current fiscal year.

Pakistan attracted $2.915 billion foreign investment in debt instruments during the current fiscal year.

Market participants were also optimistic about further reduction in the current account deficit in the coming months; following the central bank’s incentive to increase export growth.

The State Bank of Pakistan (SBP) this week enhanced maximum limit for setting up long-term export-oriented projects to Rs5 billion from Rs2.5 billion under the Long Term Financing Facility.

It also provided additional concessional financing of Rs200 billion to banks, including Rs100 billion under the Long Term Financing Facility (LTFF) and Rs100 billion under the Export Refinance Scheme.

The central bank kept the policy rate unchanged at 13.25 percent at the monetary policy review meeting held on Tuesday.