KARACHI: Economic indicators have shown that the rupee is likely to remain stable against the dollar next week after an improvement in inflows in debt securities and sluggish demand for the foreign currency for import payments.
State Bank of Pakistan (SBP) stated that foreign participants invested close to $2.5 billion in Market Treasury Bills (MTBs) and Pakistan Investment Bonds (PIBs) during July 1, 2019 to January 23, 2020.
The SBP is scheduled to announce its new policy rate on Tuesday for the next two months. The present policy rate is 13.25 per cent, and considering the inflationary pressure, the central bank is unlikely to review any downward revision.
The demand for the greenback may also remain sluggish due to outbreak of coronavirus in China. Pakistan is one of the major buyers of Chinese products. Due to this outbreak followed by health advisory, the importers may remain cautious to purchase dollars for Chinese imports.
Besides, the import bill of Pakistan had already started declining owing to slowdown in the economic side and measures taken by the government in the latest budget.
The import bill of the country fell 16.9 percent to $23.23 billion during July–December (2019/20), compared with $27.95 billion in the corresponding period of the last fiscal year.
This helped the country narrow the trade deficit by 30 percent. The trade deficit shrank to $11.69 billion in the first half of the current fiscal year, compared with the deficit of $16.77 billion in the corresponding half of the last fiscal year.
The rising foreign exchange reserves of the country may also help the local unit to stay stable in the coming days. The foreign exchange reserves held by the SBP rose to $11.586 billion as of January 10 from $11.503 a week ago.
The local currency may also move during the next week on the positive reports regarding Pakistan’s status in the Financial Action Task Force (FATF). Some reports suggested Pakistan would come out of the ‘grey list’ of the FTAF after the meeting of the working group held in Beijing, China.
During the week (January 20 to 24) the rupee gained three paisas after starting the week at Rs154.59 to end at Rs154.56 against the dollar in interbank foreign exchange market.
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