- The local unit was stable for three trading sessions this week, according to traders.
- The rupee is expected to trade between 164.10 and 164.40 per dollar.
- Analysts say the rupee has been polarized with developments pulling it back and forth.
KARACHI: The Pakistani rupee is expected to remain stable against the US dollar next week in the market, as demand and supply of the US dollar will almost match, sources said.
According to a report published in The news, the local unit remained stable over the three trading sessions this week.
“We expect the rupee to remain stable in the coming days with remittance and export flows balancing out with demand from importers,” said a forex trader at a commercial bank.
“There are about $ 2.8 billion in entries from the International Monetary Fund on Monday due to its new global allocation of Special Drawing Rights, this would help increase foreign exchange reserves and support the rupee,” he said. -he adds.
The rupee is expected to trade between 164.10 and 164.40 per dollar, he said. Analysts said the rupee was polarized with developments pulling it back and forth.
On the positive side, in addition to expected IMF inflows, most commodity prices fell in the outgoing week, with oil prices declining by around 6% on average and the current account deficit showing an improvement in the past. ‘month over month, reaching $ 773 million in July, up from $ 1.6 billion the month before.
In addition, the real effective exchange rate (REER) was slightly better in July than in the previous month. The REER depreciated to 99.4 in July from 99.8 in June.
âOn the negative side, analysts are anticipating a Fed rate hike. A rise in US interest rates will reverse flows to US markets, thereby weakening almost all currencies, including emerging markets. Last week we saw the dollar index hit a nine-and-a-half-month high, âa Tresmark analyst said in a client note on Saturday.
Second, logistical problems in the commercial sector may disrupt shipments. And finally, the uncertainty surrounding the Afghan will have a negative impact on the rupee, he said.
As for Afghanistan, the low level of foreign exchange reserves and the need for commodities will lead to active cross-border smuggling of commodities as well as hard currencies, he added.
“At the moment the factors are higher for a weaker rupee, but a recent depreciation of 7.50% in the past 3 months can be seen as sufficient by the market.”
Taliban control over Afghanistan could have serious implications for Pakistan on the geopolitical and security front; the direct economic impact appears to be insignificant; however, the deterioration of ties with the United States may affect the IMF’s program, analysts say.
The Pakistani 10-year US dollar bond saw its yield rise 25 basis points on Monday as investors shed debt.