Rupee likely to remain in range till IMF review

A money changer shows Pakistani notes of Rs 5,000 along with a bill of USD100.  — online/file
A money changer shows Pakistani notes of Rs 5,000 along with a bill of USD100. — online/file
  • If the IMF tranche goes ahead successfully the rupee may rise to 270.
  • Rupee’s movement in interbank exchanges this week was unusual: Analyst.
  • “There will be volatility during the upcoming monetary policy.”

KARACHI: The rupee is likely to remain range bound, trading between 275 to 285 against the US dollar, at least till the next review of Pakistan’s loan program by the International Monetary Fund (IMF), according to analysts.

newsAnalysts were quoted as saying on Saturday that the rupee’s movement in the interbank market this week was unusual. Since September 6, the local currency witnessed a steady rise, then a sudden pullback and eventually strengthened at 278 per dollar.

The rupee closed at 276.83 on Monday, but fell to 280.29 on Wednesday. It closed the week at 278.80 against the US dollar.

The forex market heaved a sigh of relief as it saw the Goldilocks zone (275-285) still intact for the rupee, analysts at financial services platform Tracemark said in a note.

“Rupee-dollar parity jumped from 275 level to 282 due to public sector related imports; however the real reason could be breaking the monotony of ‘one rupee rise per day’,” Tracemark’ said.

“The rupee closed the week at 278.80, but will remain range bound at least till the next IMF tranche is finalised. At the same time, there will be ups and downs at the time of monetary policy on October 30.

In the last T-bill auction, cut-off yields on three-, six- and 12-month paper declined by 30-45 basis points (bps) and the rate cut may put some pressure on the rupee.

“Given the fact that if inflation declines due to a ‘strong rupee for a long time’ policy, we may see the Goldilocks zone being tested,” it said.

“If the IMF tranche goes ahead successfully (by early next month), we could see the rupee moving towards 270 levels by mid-November and a 100-200 bps cut in interest rates before the end of this year.” Can also see.”

The IMF is expected to review the country’s ongoing $3 billion loan program next month. Pakistan secured $1.2 billion from the IMF in July and is expecting an additional $700 million once the first review is completed by December this year and the second tranche is released.

Traders also expect a range-bound movement in the currency next week ahead of the central bank’s interest rate decision.

According to traders, the rupee may trade below 280 per dollar in the coming week due to a relatively stable market.

In its next monetary policy review meeting on October 30, the State Bank of Pakistan is expected to keep its benchmark interest rate unchanged at 22% due to inflation forecast amid falling fuel prices and strengthening inflation. . local currency.

Moreover, the latest balance of payments data shows a notable improvement. Pakistan’s current account deficit (CAD) declined to $947 million in the first quarter of this fiscal year, 58% less than the same period last year. The decline in trade gap is the reason for the decline in the current account deficit.

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