The Pakistani rupee is expected to remain range-bound next week as the demand level for dollars from importers will continue to influence the local unit’s move.
The rupee is expected to be traded within the band of 163.40 to 163.90 per dollar in the upcoming week. It will remain below 164.
The domestic currency would be following range-bound trading if the inflows more or less match the demand, and there is the absence of fresh triggers.
The market is anticipating demand from importers to remain high in the coming days as they make payments, which would expectedly push the rupee to post slight losses.
Exporters are likely to sell forward whenever the rupee crosses 164 per dollar mark even if premiums are not attractive, traders said.
The currency opened weaker as increased import payments along with anxiety due to Covid-related lockdown gripped the interbank market, pushing the rupee towards nearly 10 months high of 163.67 against the dollar.
The rupee extended falls, closing at 163.89 to the dollar on Tuesday. A continuance in the backlogged oil related payments and vaccine payments from importers weighed down on the local unit.
Besides, traders saw an increase in short positions of forwards by the central bank as “some buying in the ready market”.
The expected $2.8 billion inflows from the International Monetary Fund in August calmed the nerves of a weakening rupee, giving confidence to the currency traders.
However, the Board of Governors of the IMF approved a general allocation of Special Drawing Rights (SDRs) equivalent to $650 billion to boost global liquidity. The general allocation of SDRs will become effective on August 23, 2021.
As a result of these inflows, the central bank’s foreign exchange reserves are expected to rise to record $20 billion by the end of this month.
