KARACHI, June 05(ABC): The Pakistani rupee is expected to remain stable during the next week amid improved dollar liquidity from exporters, say traders.
Investors, however, are likely to remain somewhat cautious, seeking more clarity on the political front and ahead of the next fiscal year budget, traders said, reported.
The local unit consolidated its gains and rose to 197.59 against the dollar on Thursday. However, it bounced back the next day after the government hiked fuel prices to meet the International Monetary Fund (IMF) loan conditions.
Pakistan is seeking to secure a staff-level agreement with the IMF in June. The dollar selling by exporters also supported the local unit in the outgoing week. However, the rupee gave up gains and ended weaker at 197.92 per dollar on Friday weighed by a sharp decline in the foreign currency reserves.
“The rupee seems to trade on a stable note in the coming week. Markets will be closely watching the ongoing political turmoil in the country as when the ousted Prime Minister Imran Khan will announce the date for his next march,” said a foreign exchange trader.
“Caution is also likely to prevail ahead of the 2022/23 budget to be presented on June 10 (Friday) with investors expecting IMF conditions (fiscal consolidation) to dominate. Although, credibility on how to contain the budget deficit and shore up public finances will be a key,” he added.
Some traders see a renewed pressure on the rupee on an increase in fiscal-year-end dollar demand from importers and the corporate sector. The payments related to imports and profit repatriation in the pipeline.
The report about China’s $2.7 billion deposit placement has not calmed traders’ nerves, as they are seeing the deposit not useful for either fiscal or external support.
The country’s foreign exchange reserves decreased by $378 million to $15.771 billion in the week ended May 27.