- The rupee has lost 1.19% against the US dollar in the last 5 interbank market sessions.
- The market is hopeful of an improvement in the rupee after the IMF gave a clean chit to Pakistan.
- Rupee/Dollar parity became unstable during IMF visit to Pakistan.
KARACHI: The rupee is expected to continue depreciating against the US dollar in the coming week as higher demand for the dollar from importers exceeds supplies from exporters. news Citing analysts.
The publication believes that the International Monetary Fund (IMF) review mission to Pakistan will also weaken the rupee as the local currency becomes volatile during such visits.
An IMF delegation has started talks with the country’s officials to review Pakistan’s $3 billion loan program. The review talks are scheduled to end after 14 days on November 15.
Successful talks will help Pakistan get the second loan tranche of about $700 million from the global lender. Under the standby arrangement, Pakistan received $1.2 billion from the IMF as the first tranche in July.
The rupee depreciated 1.19% or Rs 3.36 against the US dollar during last week’s five sessions in the interbank market. The rupee closed at 280.95 against the dollar on Monday and closed at 284.31 against the dollar on Friday.
“We expect the rupee to remain under pressure for the rest of the next week due to lower availability of dollars due to import payments. However, dollar inflows from exporters remained quite slow,” said a currency dealer.
Tracemark said earnings from exports have slowed down as a larger amount of exports are being adjusted against exports made earlier since the crackdown on the foreign exchange market began.
Usually, when the IMF is visiting the Rupee/Dollar parity also becomes unstable and this time, it appears that banks were not allowed to fund their Nastros through buy-sell swaps, which led to As a result, forward premiums increased and importers had to make higher payments. The spread came amid a shortage of dollar liquidity to process their payments, it said.
It said 1, 2 and 3 month forward premiums last traded at 200, 300 and 600 paise (significantly higher than 0, 0 and 90 paise last week).
It said, “The rupee is seen strengthening at 285 in the coming week, with a possible rise to 288 per dollar at times, and the market expects a correction after the IMF gives clean chit to Pakistan.” will be.”
Tracemark says there have been some encouraging developments that may perhaps indicate the future direction of interest rates and the rupee.
Exports in October stood at $2.7 billion, which is the highest this year. At the same time, consumer price index inflation (CPI) declined from 31.4% to 26.9%, which should be a very encouraging sign for policymakers, who have on several occasions avoided the temptation to raise interest rates, thereby keeping the market at bay. Strong rupee gained. Expectations.
The fall in CPI has accelerated the decline in the Karachi Interbank Offered Rate, which dropped from its high of 24.46 percent on September 13 to 21.68 percent on November 3, as the market acknowledged that interest rates will remain subdued in the short to medium term. I am at my peak. , according to Tracemark.
“This growth has not been lost on the equity markets, with the KSE index reaching an all-time high of more than 53k,” it said.
“Equity traders were encouraged not only by the evolving interest rate scenario but also by the IMF’s first good meeting with key government stakeholders and the announcement of election dates. They are now looking for some solutions on circular debt which has seriously hampered many profitable companies in the index.