Rupee seen steady next week

KARACHI: The rupee fluctuated in narrow ranges during the outgoing week and is anticipated to remain steady next week thanks to a robust supply of dollars amid a steady increase in foreign exchange reserves, dealers said.

The local currency closed Monday’s interbank trading session at 277.97 to the dollar. On Friday, the rupee ended at 278 versus the greenback.

“The demand for dollars from importers is expected to be matched by inflows from exporter sales and remittances; thus, the rupee appears to continue its current trend and be steady in the coming trading sessions,” a currency dealer said.

Pakistan’s foreign exchange reserves held by the central bank increased by $620 million to $12.04 billion as of November 29 following a $500 million loan disbursement from the Asian Development Bank.

On Thursday, Saudi Arabia extended the term of the $3 billion deposits placed with Pakistan for another year to support the country’s economy.

The term of the deposit was maturing on December 5. The deposit agreement was first signed with the Saudi Fund for Development (SFD) in 2021 and rolled over in 2022 and 2023.

According to analysts, Saudi Arabia’s extension of a $3 billion deposit will provide significant support to Pakistan’s economy.

It strengthens the country’s foreign reserves, eases external debt servicing, and stabilises the rupee by reducing pressure on the currency. While it provides short-term relief, it also highlights Pakistan’s ongoing need for external support to keep the economy stable.

“The manageable size of CAD [current account deficit] will continue to give PKR wings, and the market expects the central bank to keep buying excess liquidity,” said Tresmark in a note on Saturday.

“Unfortunately, swaps hit a brick wall last week, where some market participants suggested it was because the State Bank did buy-sell swaps. Reserves rose by more than $540 million primarily aided by the ADB’s $500 million for the climate programme,” it said.

“With the recent remitters’ love for Pakistan, analysts are seeing a $3 billion deficit for FY25. While regulator/agencies see around $4 billion,” it added.