KARACHI: Traders believe that the Pakistani rupee is likely to remain stable against the dollar in the coming week as greenback demand and supply match in the currency market, JEE News reported on Sunday.
The local currency remained stable during the outgoing week. It started the week at 223.95 per dollar in the interbank market on Monday and closed at 223.69 against the dollar on Friday.
“As inflows and outflows appear to be in par in the market, we expect the rupee to maintain its strength in the coming sessions,” said a foreign exchange trader.
Despite some encouraging developments in the week, investors will remain concerned about the uncertainty surrounding the 9th review of the International Monetary Fund’s (IMF) bailout package, the trader added.
On Friday, Saudi Arabia extended the period of $3 billion deposited in Pakistan’s foreign reserves. Additionally, the government paid for $1 billion in bonds, averting the risk of a near-term default. However, concerns remain about the country’s long-term debt servicing capacity.
The forex market is wondering how the rupee has stabilized even though the Real Effective Exchange Rate (REER) fell from 90 to 100 in October.
“The answer can be found in how SBP is examining the opening of LCs and the retirement of existing import commitments,” Tresmark said in a weekly note.
“Banks are encouraged to settle only import amounts, which match the bank’s export amounts. Everything else is kicked down the road. By managing banks’ supply and demand, balance is maintained in the interbank market. being kept
However, loan disbursements and repayments were depleting foreign exchange reserves.
Negotiations with the IMF appear to be in trouble. Although it is a lender of last resort, it also proactively evaluates borrowers’ ability to repay, Tracemark reports.
It would be “extraordinary” to expect him to be coerced for a free meal. Analysts were still hopeful that the necessary action would be taken to keep the program on track, but worried that in this critical situation, every day would count.
“Considering all the above, everyone knows that this is not business as usual. A sharp slowdown in imports will open another Pandora’s box around the law and order situation resulting in unemployment, resource There is rationing and lack of essential medicines and commodities.
With efforts to plug the hole, anything beyond December has spiraling potential. After the change of command in the army, analysts were expecting an influx from friendly countries. It was first seen on Friday when the Saudis deposited $3 billion
“In many ways, December will be critical for economic stability as we look to implement commitments from friendly countries and the IMF,” the report said.
