- Traders expect Pakistani rupee to remain range-bound next week.
- The rupee is expected to be traded within the band of 163.40 to 163.90 per dollar in the coming sessions, says a foreign exchange trader.
- The market anticipates demand from importers to remain high in the coming days.
Pakistani rupee to remain range bound next week: Traders expect the Pakistani rupee to remain range-bound next week as the level of demand for dollars from importers will continue to influence the local unit’s move, The News reported.
The domestic currency would be following range-bound trading if the inflows more or less match the demand, and there is absence of fresh triggers.
According to a foreign exchange trader, “The rupee is expected to be traded within the band of 163.40 to 163.90 per dollar in the coming sessions. The 164 is likely to act as a major resistance level, while 163 should be still a support level for the rupee.”
The market anticipates demand from importers to remain high in the coming days as they make payments, which would expectedly push the rupee to post slight losses.
Exporters are likely to sell forward whenever the rupee crosses 164 per dollar mark even if premiums are not attractive, traders said.
The currency opened weaker as increased import payments along with anxiety due to Covid-related lockdown gripped the interbank market, pushing the rupee towards nearly 10 months high of 163.67 against the dollar.
The rupee extended falls, closing at 163.89 to the dollar on Tuesday. A continuance in the backlogged oil related payments and vaccine payments from importers weighed down on the local unit.
Besides, traders saw an increase in short positions of forwards by the central bank as “some buying in the ready market”.
The expected $2.8 billion inflows from the International Monetary Fund in August calmed the nerves of a weakening rupee, giving confidence to the currency traders.
However, the Board of Governors of the IMF approved a general allocation of Special Drawing Rights (SDRs) equivalent to $650 billion to boost global liquidity. The general allocation of SDRs will become effective on August 23, 2021.
As a result of these inflows, the central bank’s foreign exchange reserves are expected to rise to record $20 billion by the end of this month.
Pakistan has received $1.87 billion from overseas Pakistanis through Roshan Digital Account at the end of July.
The forex reserves held by the SBP increased to $17.846 billion during the week ended July 30 from $17.829 billion a week ago.
The country’s exports rose 17.3 percent to $2.35 billion in July from $2 billion a year ago.
However, higher trade deficit could not bode well for the rupee and the current account deficit as well.
Trade gap widened by 81 percent to $3.06 billion in July. Imports rose by 47 percent to $5.41 billion in July.
The outlook for the current account deficit would depend upon the remittance inflows. If the remittances from overseas Pakistani workers remain robust, it will help squeeze the current account deficit in coming months, said Analysts.
This article originally appeared in the August 8 edition of daily The News. It can be accessed here.