Stable Rupee Expected Against Dollar Next Week Starting June 10

Stable Rupee Expected Against Dollar Next Week Starting June 10 – The Pakistani Rupee is anticipated to maintain its stability against the US dollar in the upcoming week beginning June 10, 2024.

Financial market analysts predict that the rupee will remain steady despite an increase in dollar demand for foreign payments, including imports and corporate obligations.

Throughout this week, the rupee exhibited a range-bound trading pattern in the interbank market. On Monday, the local currency closed at 278.36 against the dollar and showed a marginal improvement, closing at 278.20 on Friday. This performance indicates a stable and liquid interbank market, buoyed by record-high remittances and a surge in foreign purchases of treasury bills.

A lower-than-expected inflation reading had minimal impact on the rupee’s strength. Consequently, experts forecast the rupee to remain within a narrow trading range even after Monday’s anticipated monetary policy decision.

A slight increase in import activity is noted, which is expected to intensify post-budget. The budget presentation is scheduled for June 12, and following that, year-end payments and a seasonal rise in imports might exert pressure on the rupee. However, traders do not foresee any significant depreciation.

According to data from the State Bank of Pakistan (SBP), the country received a net inflow of $75.5 million into treasury bills through special convertible rupee accounts as of May 17, 2024. So far in the current fiscal year, net inflows have reached approximately $232 million. Experts believe that the trend of foreign inflows into government securities will continue, supported by the stability of the Pakistani rupee and the anticipation of a new IMF loan program.

Pakistan has experienced three consecutive weeks of favorable economic news. In April, the country recorded a current account surplus of $491 million. In May, the reported inflation rate was 11.8%, which was about 200 basis points (bps) lower than market expectations. Additionally, SBP data showed that remittances from Pakistanis working abroad hit a record high of $3.2 billion in May. This surge in remittances could potentially lead to a current account surplus of around $700 million for the month.

Despite these positive developments, analysts and traders express concerns regarding the government’s plans on taxation, fiscal management, and anti-corruption measures as the new fiscal year’s budget and the IMF program approach. Consequently, bonds saw a slight increase last week while the stock market experienced a decline of over 2,000 points.

Overall, the Pakistani rupee is expected to maintain its steadiness against the US dollar in the forthcoming week, supported by strong remittance flows and positive economic indicators, despite the pressures from rising import activities and fiscal uncertainties.