KARACHI – Currency dealers are forecasting a stable outlook for the Pakistani rupee in the upcoming week, primarily due to a balanced supply and demand of the US dollar. The market has seen no significant triggers that could lead to volatility. This week, the rupee exhibited minimal fluctuations, with the interbank rate closing at PKR 278.63 per USD on Friday.
Dealers predict that the rupee will likely remain within a PKR 20-30 range until the International Monetary Fund (IMF) gives the green light to Pakistan’s $7 billion loan program. Despite the uncertainty surrounding the IMF decision, dollar liquidity in the market appears sufficient to meet the country’s import needs, providing a cushion against any unexpected fluctuations.
There is a wave of positive sentiment in the market, fueled by the anticipated approval of the IMF loan. The approval is expected to bolster Pakistan’s credit rating, which could lead to an influx of foreign investment. Additionally, commitments from China and the UAE to support Pakistan’s economic stability have further strengthened confidence in the currency’s short-term stability.
Several factors are working in favor of the rupee. These include the expected approval of the IMF loan, stable foreign exchange reserves currently standing at $9 billion, an increase in export earnings, and consistent remittance inflows averaging around $3 billion per month. Another promising development is the anticipated successful launch of Panda bonds, which could provide an additional boost to Pakistan’s foreign exchange reserves.
However, not all indicators are positive. Concerns are growing about a potential recession in the United States, which could have a ripple effect on global demand and lead to currency adjustments. Additionally, the recent decline in interest rates has somewhat diminished the rupee’s appeal to investors seeking higher returns.
In conclusion, while the immediate outlook for the rupee appears stable, driven by positive developments such as the potential IMF loan approval and strong foreign exchange reserves, the long-term stability of the currency remains uncertain, with external economic factors posing significant risks.
