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Friday March 29, 2024

Rupee may gain

By Our Correspondent
February 16, 2020

The rupee is likely to gain further in the days ahead due to soft dollar demand from imports payments, increased inflows in the debt market and expectations of positive outcome from the Financial Action Task Force’s (FATF) upcoming review, dealers said.

“I expect the currency to trade on a positive note next week, amid positive triggers in the market,” a forex dealer at a mid-tier commercial bank said.

“The cues would be from the FATF review meeting being held in Paris from February 16 to decide on Pakistan’s request to be taken off its gray list of non-compliant states,” he added.

Dealers said the lack of payments pressure could also help the local currency boost its value against the greenback.

“There are no bigger import payments due next week. The prevailing insignificant dollar demand could be met very well by the dollar inflows,” another dealer said.

Most traders expect the rupee may trade below 154 level against the dollar in the coming days.

Meanwhile, the rupee gained 27 paisas to close at 154.16 against the dollar in the interbank market during the outgoing week.

Traders are optimistic that Pakistan would be removed from the FATAF non-compliant list, as the US has welcomed Pakistan government’s efforts to meet FATF requirements.

The US said Pakistan is moving closer to meeting its commitment to curb money laundering and financing for terrorism.

Net foreign portfolio investment in treasury bills reached $3.134 billion during the current fiscal year. The net investment in Pakistan Investment Bonds stood at $36 million so far this fiscal year.

However, the delay in signing of a staff level agreement between the government and the International Monetary Fund weighed on sentiment.

The IMF, in its statement, said Pakistan has made considerable progress on its program, but mentioned that final agreement on the targets for the next months remained elusive.

While remittances from overseas Pakistani workers increased 3.31 percent to $11.394 billion in the first six months, foreign direct investment is not showing any sign of recovery. Exports are moving up only slowly, while reduction in imports are also hurting the import-reliant export sector.

Foreign inflows in the coming days will determine the strength or weakness of rupee in days to come.