KARACHI: The rupee is expected to trade weaker against the dollar next week, with oil importers suffering from a hunger for the dollar.
“We can see pressure from oil importers to buy. The boom in economic activity means increased demand for dollar payments for imports of energy, machinery and equipment.
“Inflows may not be enough to meet market demand. Therefore, we expect the rupee to reach the level of 161 against the dollar, with a little more ground if not enough to meet the influx. will be done. “
The rupee lost 0.14% or 23 paise to close at. 160.75 during the outgoing week. Analysts say the rupee has a strong support line of 161.20, and it looks like it will take a hit next week.
“As the rupee weakens, we will need to look at interest rates,” he said. When the central bank announced its monetary policy, most of the delimiters, bonds and exchanges jumped slightly, but then easily declined, as markets realized that the central bank would maintain the status quo. And no additional concessions in interest rates will be purchased. Dollars, “said a tracemark in a weekly report.
The State Bank of Pakistan (SBP) has not kept interest rates unchanged at 7% in its monetary policy and has (for the first time) guided the markets to stable interest rates in the near term.
“Markets represent a near-term period around May, when inflationary pressures (Ramadan) generally build up. Similarly, macros are healthy (including exports, remittances and electricity). (Including account), the new year usually brings some fresh payments and adjustments, and the arrival of OutFoss puts pressure on the currency.
State Bank of Pakistan Governor Dr. Raza Baqir said in a post-Friday monetary policy meeting that in the most difficult time of the corona virus epidemic, the flexible exchange rate system proved to be an effective way to absorb external shocks.
Pakistan’s exchange rate has not been much affected by the negative effects of epidemics. The flight of the global capital from risky assets to safe haven assets has led to a currency decline of 15% to 21%, mostly in emerging markets.
However, between January 2020 and January 22, 2021, the local currency depreciated by only 3.8% against the dollar compared to other emerging countries, he said. Analysts believe that the recent rise in international oil prices will have an impact on imports in the coming months.
However, he estimates that the current account balance will remain large at about $ 1.5 billion, or 0.5 to 1% of GDP in FY21.
Pakistan’s current account went into a deficit of 66 662 million in December, up from 5 513 million in the previous month, the worst since October 2019. The rupee will reach 166 by the end of June and 172 by the end of December.