Rupee edges up

The rupee, ahead of monetary policy announcement, edged higher on Monday as the dollar’s losses versus major units globally strengthened the local currency.

The rupee recovered another 57 paisas against the dollar to close at Rs158.40 from the previous close of Rs158.96 in the interbank foreign exchange market.

The foreign currency market was traded in the range of Rs154.75 and Rs158.00. The market recorded day high of Rs158.75 and low of Rs157.75.

The exchange rate in open market was remained stable. The dollar was traded at Rs158.00, the same closing level on last Friday, in cash ready market. Dealers said soft oil prices also helped local currency to recover as the market expects less dollar demand in short term for oil imports.

Brent oil on Monday fell around 10 percent to trade at $30.56/barrel. Pakistan is major buyer of petroleum products from international markets. The country had spent $14.44 billion for import of petroleum products during fiscal year 2018/2019. The oil bill is around 26.35 percent out of total import bill of $54.799 in 2018/2019.

The market is also expecting a cut in policy rate which is scheduled to be announced on March 17, 2020. Currency experts said that the State Bank of Pakistan (SBP) likely to follow other central banks to reduce the key policy rate in order to support struggling growth.

Most of the analysts believed that the central bank likely to cut 100 basis points in the monetary policy. Brokerage Taurus Research said that money markets had commenced responding to the anticipated easing in the form of declining yields across both long-term and short-term government securities. The cut-off yield on three – month treasury bills declined 76 basis points. Elsewhere, yield on three-year PIBs dropped 46 basis points in the latest auction.