KARACHI: According to traders, the Pakistani rupee is likely to be steady against the dollar during the course of the upcoming week due to a balanced supply and demand for the dollar on the currency market, The news reported on Sunday.
The local currency was constant throughout the previous week. On Monday, it ended at 223.95 to the dollar in the interbank market to start the week, and on Friday, it closed at 223.69 to the dollar.
Foreign currency trader: “We predict the rupee to sustain its firming tone in the sessions ahead as the inflows and outflows appear to be equal in the market.”
Rupee to trade steadily on matching demand and supply for the dollar
Despite some positive developments this week, the trader continued, investors would still be concerned about the uncertainties surrounding the IMF’s (International Monetary Fund) 9th assessment of the rescue deal.
Saudi Arabia extended the period of its $3 billion deposit into Pakistan’s foreign exchange reserves on Friday. Additionally, the government paid the bond for $1 billion, removing the possibility of a short-term default. Concerns regarding the nation’s capacity to repay its long-term debt yet persist.
The real effective exchange rate (REER), which depreciated from 90 to 100 in October, has the currency market perplexed as to how the rupee managed to stabilise.
In a weekly note, Tresmark stated, “The solution to this can be found in how SBP is scrutinising the opening of LCs [letters of credit] and retirement of existing import obligations.”
“Banks are urged to only settle import payments that correspond to their export payments. The rest gets pushed down the road. “Equilibrium in the interbank market is being maintained by controlling the demand and supply of banks,” it stated.
However, it continued, debt servicing and repayments were depleting the foreign exchange reserves.
IMF negotiations appear to be having problems. Despite being a lender of last resort, it aggressively assesses the ability of borrowers to repay debt, according to the Tresmark research.
Expecting to force it into accepting a free lunch would be “strange.” Analysts were concerned that in that precarious scenario, every day would matter, but they remained optimistic that the essential steps would be made to keep the programme on track.
Everyone is aware that things are not going as usual in light of the aforementioned facts. The research warned that the extreme slowdown in imports “will open another Pandora box around the law & order situation brought on by unemployment, resource rationing, and a shortage of vital commodities and medications.”
Anything past December has the potential to spiral even with efforts to close the gap. Analysts anticipated an influx from friendly nations following the army’s change of command. The first occurred on Friday when Saudi Arabia rolled over a deposit of $3 billion.
As we wait for assurances from friendly countries and the IMF to materialise, December will be crucial for economic sustainability, according to the research.
