Rupee likely to add more gains

KARACHI: The rupee is expected to post minor gains next week due to tepid dollar demand from importers, with healthy dollar inflows also supporting the local unit, traders said on Saturday.

“We anticipate the rupee to extend its upward trend against the dollar, helped by a flat appetite for the hard currency from imports for payments and increased inflows from remittances and official sources,” a foreign exchange trader with a leading commercial bank said.

“The rupee should trade at 159 level per dollar in the coming week.”

In the interbank market, the rupee gained 38 paisas to close the outgoing week at 160.09 versus the greenback.

“The outlook for the domestic currency, as we head towards the end of the month, is that of stability,” another dealer said, adding that if some import payments are pending, these will be easily covered by the inflows available in the market.

Traders said the prevailing positive sentiment about the country’s economic outlook in the market would lend support to the local unit.

Remittances from Pakistani expatriates rose 26.9 percent to $11.7 billion in July-November of the fiscal year 2020/21.

Inward remittances from overseas Pakistanis into Roshan Digital Account stood at $154.6 million, with $88.7 million invested in Naya Pakistan Certificates so far.

Pakistan’s foreign exchange reserves slightly dropped to $20.379 billion during the week that ended December 11 from $20.402 billion a week ago.

The foreign exchange reserves held by the State Bank of Pakistan as of December 11 remained flat at $13.298 billion.

The rupee is likely to trade range-bound over the next week. The local currency can see up and down in trading sessions, depending on the import payments, but largely the local unit seems to move slightly upward, dealers added.

Japan has extended grant assistance of one billion Japanese yen (around $9.5 million) to Pakistan for enhancing its capacity to confront COVID-19 and other infectious diseases.

Positive data on industrial output boosted traders’ sentiment. This signals the country’s economic recovery from the coronavirus pandemic gaining momentum.

Data issued by the Pakistan Bureau of Statistics (PBS) showed that large-scale manufacturing (LSM) output grew 3.95 percent in October, compared with September.

LSM output grew 6.66 percent for October, compared with October 2019, the PBS data showed.

The government repaid $1 billion of the total $2 billion loans to Saudi Arabia. The next installment is scheduled for January 2020.

Moreover, the potential dollar inflows from bilateral and multilateral sources will lend support to the local currency in the near-term.