KARACHI: The rupee is expected to maintain the upward trend next week, owing to the positive sentiments and flows of the external receipts.
The local currency may get support from the transfer of the International Monetary Fund (IMF) tranche and other external payments, besides ease in the demand for import payments.
The exchange rate for the week ended February 4, 2022 closed at Rs174.48 against the greenback in the interbank foreign exchange market. The local currency is gradually improving for the last eight consecutive days after reaching Rs176.98 to the dollar on January 26, 2022.
The sentiments in the currency market during the outgoing week were positive due to the receipt of $1 billion under the Sukuk proceeds. Further, the approval of the 6th tranche by the IMF for Pakistan also supported the rupee.
On February 2, 2022, the IMF Executive Board approved over $1 billion 6th tranche of the Extended Fund Facility (EFF) for Pakistan, taking the total disbursement under the programme to $3 billion, which will support the foreign exchange reserves of the country.
The foreign exchange reserves of the country deteriorated sharply. Pakistan’s liquid foreign exchange reserves plunged $397 million to $22.085 billion by the week ended January 28, 2022 as against $22.482 billion by the week ended January 21, 2022.
The dealers said the rupee might also get support, as the latest numbers of import bill had shown a decline over the previous month after the imposition of measures introduced through the mini-budget.
The import bill in January 2022 recorded a decline of 22 per cent to $5.9 billion, compared with $7.58 billion in December 2021, according to the data released by the Pakistan Bureau of Statistics.
Analysts at Arif Habib Limited said after the IMF endorsement, more dollar funding for Pakistan is likely from bilateral, multilateral and other sources.
Finance Minister Shaukat Tarin had recently said that the government plans to raise $1 billion ESG-compliant Eurobond next month.
The rising oil prices in the international market remained a challenge for the rupee stability in the coming days, the analysts said.
Pakistan is the net importer of petroleum products to feed domestic demand and any surge in the international oil prices might result in a significant increase in import bill.
The benchmark Brent crude hit $91.53/barrel on Friday at 0745 GMT, ringing an alarm bell for higher dollar demand in Pakistan.
The country’s oil import bill surged 113 per cent to $10.18 billion during the first half (July-December) 2021/2022, compared with $4.77 billion in the corresponding half of the last fiscal year.
