KARACHI: The rupee posted moderate gains against the dollar during the outgoing week, but the traders said they expected the rupee to be range-bound after the currency market opened on May 17, depending on the level of demand for the dollars from importers and inflows’ position.
The financial markets will remain closed from May 10 to 15 on account of Eid-ul-Fitr holidays.
The rupee started the week at 153.56 in the interbank market, and surged to 23-month high of 152.27 against the dollar on Friday due to the healthy inflows in the shape of workers remittances in Ramazan.
The advent of Ramazan and Eid increased the inflows of remittances from overseas Pakistanis, helping bolster the domestic currency.
The local unit appreciated 0.83 percent against the greenback this week.
“We expect the rupee to face a mild pressure after Eid, going back to 153 level again in anticipation of the rise in import payments. However, the rupee is unlikely to see any
bid fluctuation in its movement if the supplies remain healthy,” a foreign exchange dealer said.
“The sentiment on the rupee may hurt if the government further tightens coronavirus restrictions after Eid holidays.”
The country’s foreign exchange reserves fell 3.30 percent to $22.742 billion as of April 30, weighed down by foreign debt repayment.
The government’s increasing foreign debt obligation put pressure on the country’s forex reserves and the currency, as well.
Pakistan will have to pay $3.8 billion to external creditors in the last quarter of the current fiscal year.
The forex reserves may face a further decline, if there is any gap in the projected disbursements.
The country’s external debt servicing is expected to be above $10 billion in the next fiscal year.
Sentiment was lifted late Friday after the emergence of the news that the ecommerce giant Amazon has decided to add Pakistan to its sellers’ list within the next few days.
Under this advancement, the exporters will be able to sell their products through the online platform.
Meanwhile, the government on Wednesday raised Rs556.7 billion through the auction of Market Treasury Bills, with the yields falling on shortest tenor papers, as investors expect the interest rates to stay steady in the coming months due to rising coronavirus cases in the country.
The raised amount was slightly higher than the pre-auction target of Rs500 billion. The offered amount was Rs1.618 trillion.
The government aims at borrowing Rs5 trillion from banks in the May-July 2021 period to help finance the budget deficit.
The government planned to raise Rs4.1 trillion through borrowing from the Market Treasury Bills and Rs900 billion from Pakistan Investment Bonds (PIBs) by the end of May.