- The rupee closed at 176.49 against the US dollar in the interbank market.
- Dealers believe the rupiah will gain ground against the greenback this week.
- The local unit has depreciated by 12.02% since July 1, 2021.
KARACHI: The Pakistani rupee fell to 176.49 against the US dollar on Monday amid the central bank’s reluctance to intervene in the foreign exchange market to mitigate the pace of the currency’s decline.
On Monday, according to data released by the State Bank of Pakistan (SBP), the rupiah closed at 176.49 against the US dollar in the interbank market.
Currency traders believe the rupiah will gain ground against the greenback this week, helped by inflows from exporters and hopes of an International Monetary Fund (IMF) loan program approval.
With a further drop of 0.14%, the Rupee has depreciated by 12.02% (or Rs18.95) since the start of the current financial year on July 1, 2021, data released by the central bank showed. .
The rupee has maintained its downtrend over the past eight months. It has lost 15.9% (or Rs24.44) so far, compared to the 22-month high of Rs152.27 recorded in May 2021.
A currency trader said: “We are mildly bullish on the rupee next week as we expect the local currency to appreciate due to exporters selling dollars, lower import payments and the likely approval of the $6 billion IMF Extended Financing Facility (EFF).”
Analysts said markets are gearing up for this week, which has two key events underway; central bank monetary policy today and the IMF board meeting scheduled for January 28 to consider Pakistan’s request for the completion of the sixth review and the release of a $1 billion tranche as part of the EFF.
Traders are watching how the SBP Monetary Policy Committee views rising inflationary pressure and external accounts while making the interest rate decision.
“If the approval [from IMF] is granted, markets will see a flurry of activity, including new bond issues, multilateral commitments, more fiscal space generating a growth spurt, accelerated privatizations, FATF relief [Financial Action Task Force]etc said Tresmark in a report.
“We also see momentum in dollar futures selling picking up significantly in the current week.”
According to the report, analysts do not see the rupee above 180 per US dollar at the June close and the rupee’s status is still slightly undervalued.