KARACHI: The rupee is likely to stay range-bound in the coming week as importers’ demand for dollars competes with inflows from exporters and remittances, traders said on Saturday.
This week, the local currency crossed the 279 per dollar mark in the interbank market, aligning with earlier forecasts by currency dealers. On Monday, the rupee closed at 279.04 against the US dollar, dipping further to 279.14 on Thursday. However, it made a slight recovery on Friday, ending the week at 279.05. Trading remained suspended on Wednesday due to the Kashmir Day holiday.
A foreign exchange trader noted that the rupee is expected to trade within a narrow range, with fluctuations depending on market dynamics.
“If demand for dollars by importers exceeds the available supply from exporters and remittances, the rupee may come under slight pressure. However, if inflows are sufficient to meet demand, the rupee could see modest appreciation while staying close to the 279 per dollar level next week,” the trader explained.
Market analysts believe that the rising foreign exchange reserves held by the State Bank of Pakistan (SBP) will help stabilize the rupee. The SBP’s forex reserves increased by $46 million, reaching $11.418 billion as of January 31. However, Pakistan’s total forex reserves declined by $8 million to $16.044 billion, with commercial banks’ reserves dropping by $54 million to $4.626 billion.
Despite these fluctuations, economic indicators point to a steady external account, driven by higher remittances and export earnings. The SBP’s ongoing dollar-buying strategy from the market has also contributed to maintaining stability in the rupee’s value.
Meanwhile, Fitch Ratings has acknowledged Pakistan’s progress in restoring economic stability and improving external buffers. The agency forecasts a 3.0% GDP growth for fiscal year 2025.
According to a report titled “Pakistan’s Progress on Structural Reform Remains Key to Credit Profile,” Fitch emphasized the importance of implementing difficult structural reforms. These efforts will be critical in securing continued International Monetary Fund (IMF) support and financing from other bilateral and multilateral lenders.
As economic conditions evolve, traders and policymakers will closely monitor developments in import payments, remittances, and investor sentiment, which will play a key role in determining the rupee’s trajectory in the coming weeks.