- The rupee ends the week at 278.56 against the US dollar on Friday.
- It will remain stable thanks to the IMF program: report.
- The currency will move in tight ranges over the next few sessions.
KARACHI: Thanks to healthy supplies and weak demand for dollars from importers, according to dealers, the rupee is expected to remain stable against the dollar next week, News reported Sunday.
The local currency closed Monday’s interbank trading session at 278.56 per US dollar. On Friday, however, the local unit recovered from its losses and closed at 278.46.
“Given that importers and businesses appear to have bought dollars to cover their year-end obligations and the government has repaid its external debt, we expect the rupee to move in tight ranges in the coming sessions,” said a foreign exchange trader.
“Exporters will likely enter the market to sell dollars, which will increase supply when combined with remittances,” he added.
The foreign exchange market has remained generally calm since May 2023 due to narrowing spreads between exchange rates in interbank and parallel markets, according to analysts.
A recent report by AKD Securities titled “Pakistan Strategy 2025” forecasts that the rupee will remain stable, supported by the International Monetary Fund (IMF) program and strong remittance inflows.
The IMF program would ensure exchange rate flexibility, functionality of the foreign exchange market and strengthening of institutions to safeguard financial stability, he said.
At the same time, continued efforts to deepen the interbank foreign exchange market as well as greater price discovery would further support monetary stability, he added.
Greater transparency in the interventions of the State Bank of Pakistan (SBP) and its foreign exchange accumulation strategy would play a vital role in the development of the foreign exchange market.
A stable foreign exchange market allowed the SBP to make large foreign exchange purchases, which helped build reserves, the report said. During the period June 2024 to August 2024, the SBP made net purchases of $1.9 billion in the foreign exchange market.
The IMF’s willingness to maintain the shortening of the export earnings repatriation period, if any, would strengthen the central bank’s leverage to maintain currency stability, even with low foreign exchange reserves.