Tuesday, November 29, 2022

Rupee may remain stable next week

KARACHI: The rupee is expected to remain stable against the dollar next week, as inflows from remittances and exports proceeds match the demand from oil and other importers, dealers said on Saturday.

The rupee gained 0.14 percent to close at 159.99/dollar in the interbank market during the outgoing week.

“Dollar inflows from exports and remittances from Pakistani workers abroad are likely to balance the demand from importers in the coming sessions, while the central bank’s robust foreign exchange reserves are also expected to help boost sentiment in the market,” a forex trader at one of the commercial banks said.

Pakistan’s foreign exchange reserves increased to $20.163 billion during the week ended January 29 from $20.106 billion a week ago.

The forex exchange reserves held by the State Bank of Pakistan increased $33 million to $13.031 billion as of January 29.

Likewise, the foreign exchange reserves of commercial banks also increased to $7.131 billion from $7.108 billion.

The agreements with the international financial institutions for Pakistan’s financial support could also have positive implications for the local unit.

The Asian Development Bank (ADB) has endorsed a new five-year country partnership strategy to provide an estimated $10 billion loan to Pakistan for five years. The World Bank would also extend a $12 billion loan to the country under a programme starting from the next fiscal year. The news of retaining $2 billion loans from Saudi Arabia and the United Arab Emirates to Pakistan could provide support to the local unit in the coming days.

There are reports that Saudi Arabia has retained the remaining $1 billion deposit, while the United Arab Emirates has also rolled over a $1 billion deposit for another year.

“We anticipate the rupee to trade in the range of 159.75 and 160.25 to the dollar next week,” he added.

However, the rupee may weaken slightly by 20 to 25 paisas if any sudden demand for the greenback for import payments emerges in the market, they said.

Traders said the market players await the outcome of the global illicit watchdog, Financial Action Task Force (FATF), before taking fresh positions.

Markets are hopeful that FATF would delist Pakistan from its grey list at its next plenary meeting, which is scheduled to take place from February 22 to 25. Exports increased 5.5 percent to $14.245 billion in the seven months of the current fiscal year. Remittances to Pakistan stood at $14.2 billion in July-December FY21, up 24.9 percent from a year ago.

Source: The News

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