Rupee likely to remain stable against dollar next week (original) (raw)

A foreign currency dealer counts US dollars at a shop in Karachi, on May 19, 2022. — AFP/File

A foreign currency dealer counts US dollars at a shop in Karachi, on May 19, 2022. — AFP/File

KARACHI: Driven by healthy supplies and soft dollar demand from importers, as per dealers, the rupee is likely to remain stable against the dollar next week, The News reported on Sunday.

The local currency ended Monday’s interbank trading session at 278.56 to the US dollar. On Friday, though, the local unit returned from its losses and closed at 278.46.

"Since importers and companies appear to have bought dollars to cover their year-end obligations and the government has paid off its external debt, we anticipate that the rupee will move in narrow ranges over the coming sessions," said a currency dealer.

"Exporters are likely to enter the market to sell dollars, which will increase supply when combined with remittances," he added.

The forex market largely remained calm since May 2023 due to the narrowing of spreads between the exchange rates in the interbank and parallel markets, according to analysts.

A recent report by AKD Securities titled "Pakistan Strategy 2025" anticipates that the rupee will stay stable supported by the International Monetary Fund's (IMF) programme and strong remittance inflows.

The IMF programme would ensure exchange rate flexibility, forex market functionality and strengthening institutions to safeguard financial stability, it said.

Meanwhile, continuing efforts to deepen the interbank forex market along with greater price discovery would further support currency stability, it added.

Greater transparency in the State Bank of Pakistan's (SBP) interventions and forex accumulation strategy would play a critical role in the development of the forex market.

A stable FX market has allowed the SBP to conduct sizeable forex purchases, which have helped build reserves, according to the report. During the period from June 2024 to August 2024, the SBP has made net purchases of $1.9 billion from the forex market.

The IMF's willingness to maintain the shortening of the period for repatriation of export proceeds as appropriate would enhance central bank leverage to maintain stability in currency, even with low forex reserves.