KARACHI: The dollar is likely to trade in the range of the rupee in the coming week due to matching supply and demand, however, it may recover on some grounds on positive inflows from friendly countries, JEE News reported on Sunday.
During the outgoing week, the local currency closed at 223.91 against the greenback, while it closed at 224.40 per dollar on Friday. The rupee fell by 0.21 percent.
“We expect trading to continue around current levels, with minor volatility, unless we see some encouraging news from Saudi Arabia on its support,” said a currency dealer. “.
The country’s foreign exchange reserves have fallen to their lowest level in nearly four years and are only enough to cover one month’s worth of imports. Foreign exchange reserves held by the State Bank of Pakistan (SBP) fell by $784 million to $6.7 billion as of December 2. With reserves dwindling sharply, the country is struggling to meet external financing needs.
“We don’t think the market will react too strongly to dangerously low foreign exchange reserves as the central bank moves to address concerns about the country’s potential for default,” the dealer added.
“This will help reduce uncertainty and speculation in the market,” he hoped.
In a recent podcast, State Bank Governor Jameel Ahmed said that Pakistan would continue to make timely debt repayments while expected a significant increase in revenue in the second half of the current fiscal year.
State Bank paid off two commercial loans totaling $1.2 billion. Ahmed said that in the coming days, banks were expected to refinance the same amount, which would help boost the country’s foreign reserves.
“The government is also in talks with a friendly country to provide a loan of $3 billion and talks are ongoing with multilateral agencies for further financial support,” he added.
Pakistan’s debt consists of bilateral and multilateral creditors and only a small portion is owed to foreign banks. He claimed that “State Bank has sufficient reserves to meet all obligations efficiently.”
About $33 billion is owed to external stakeholders for fiscal year 2023, including $10 billion in current account deficit (CAD) and $23 billion in debt repayments. According to the Governor of the State Bank, of the outstanding external debt of $23 billion, Pakistan has already repaid more than $6 billion.
Apart from this, a bilateral loan of 4 billion dollars has also been given with the support of the respective countries. An additional $8.3 billion in maturing obligations is expected to be terminated as negotiations continue. The balance of outstanding payments for this fiscal year is about $4.7 billion.
This includes $1.1 billion in commercial loans owed to foreign banks and $3.6 billion in multilateral loans. Pakistan has earned $4 billion in foreign exchange (excluding rollover of $4 billion).
Analysts said the interbank market remained mostly limited despite action in the open market. Dollars are scarce in the curb market.
