KARACHI: The rupee is likely to stabilize or weaken slightly against the dollar next week on increased demand for hard currency from importers, traders said on Saturday.
“The local unit is expected to follow the excessive trade pattern by next week. However, rising demand for dollars for import payments, especially oil, could hamper the stability of the rupee,” he said. Said a foreign exchange trader.
Another trader said, “Pointing out this week, we expect the local unit to trade the dollar on the backup foot in the coming sessions, as expected demand in the market rises and supply dwindles.”
“The next range should be 160.25 and 160.75,” he added.
The rupee remained mostly stable with a modest gain in the last fourth session of the outgoing week.
Silent demand for the domestic currency, strong inflows from exports and remittances, and positive sentiment about the country’s economic outlook helped.
The local currency managed to trade between 160 and 160.50. It gained 24 paise against the greenback in the interbank market from Tuesday to Thursday.
However, the sudden demand for import payments during the last session limited the gains. The rupee closed at 160.33 on Friday.
The decline in the central bank’s foreign exchange reserves has affected traders.
State Bank of Pakistan’s foreign exchange reserves declined by ڈالر 12 million to 13 13.40 billion as of January 8.
The traders said that in view of the positive developments on the economic front, the outlook for the local unit is stable in the near term.
The resumption of the suspended International Monetary Fund (IMF) program in the coming days, positive economic indicators and significant improvement on the external account front could help the rupee.
Fixed market exchange rates, rising remittances, lower energy import bills, and suppressing domestic demand helped balance the current account growth in the first five months of the current fiscal year.
The country had a gap of 1. 1.640 billion during the July-November fiscal year compared to a deficit of 1. 1.745 billion in the same period last fiscal.
Encouraging industrial output and a strong outlook for Pakistan’s economy, as well as a recent report by Moody’s through the banking sector, have had a positive impact on the rupee.
The massive manufacturing index rose 14.45% in November, while overall, the index grew 7.4% year-on-year in the first five months of the current fiscal year.
The market expects the LSM index to remain bullish on accelerating the manufacturing process, improving aggregate demand and new investments.
Markets are expected to ease continued financial easing by the State Bank of Pakistan (SBP), as they have correctly identified the risk of developing the second corona virus epidemic and FY21. I predict a 1.5% to 2.5% increase in GDP.
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