Canada Global (Web News) Traders and analysts believe that the Pakistani rupee is unlikely to fall from its current level against the US dollar, which has seen it gain about 4 percent this week.
All eyes will be on the State Bank of Pakistan (SBP) to see if it will hike interest rates or keep them at their current levels.
Despite dwindling foreign exchange reserves and Moody’s downgrade of the country’s sovereign credit rating, the rupee continues to appreciate against the greenback.
The Pakistani rupee has outperformed major currencies against the dollar over the past week.
On Friday, the rupee ended at 219.92 per dollar, up 0.92 percent from its previous close of 221.94 in the interbank market.
“The trend is for the rupee to strengthen,” said a forex trader, adding that exporters were rushing to sell dollars before the local currency appreciated further. “There is sufficient supply in the market to meet the demand of importers.”
According to the dealer, speculative activity had declined as the government seemed to have reined in speculation.
In the week ended September 30, foreign reserves held by the State Bank fell by $106 million to $7.9 billion. Reserves are sufficient to cover 1.13 months of imports.
The decline in reserves was due to repayment of external debt, including interest payments on Eurobonds.