KARACHI: The rupee is expected to remain flat in the forthcoming week, currency traders anticipate, despite the country’s scheduled repayment of $1 billion in international bonds.
The country is expected to receive the final tranche under the bailout program, which is due within the month and is poised to balance the outflow from the Eurobond payments.
According to the currency dealer. “The upcoming IMF tranche is seen as a significant buffer that should mitigate the impact of the bond repayment.”
This week, the rupee saw two trading sessions. On Monday, the local unit closed at 277.95 against the dollar, and on Tuesday, it closed at 277.94. Markets were closed from Wednesday to Friday for public holidays on account of Eid-ul-Fitr.
The dollar bond repayments made by Pakistan’s central bank on Friday are anticipated to strain the foreign exchange reserves.
However, the traders said that the rupee is not likely to see a large fluctuation as the payments were planned and due to the optimism about the new IMF loan programme.
“Because of the weak dollar demand from importers and the improved dollar liquidity brought about by higher remittances, dollar sales by exporters, and positive sentiments, we anticipate that the rupee will be stable over the next week,” said a forex dealer.
IMF Chief Kristalina Georgieva confirmed that the inflation-hit nation was seeking a fresh bailout package after the completion of Stand-By Agreement (SBA).
Pakistan and the IMF last month reached a staff-level agreement on the second and last review of the SBA, which, if cleared by the global lender’s board, will release about $1.1 billion to the South Asian nation this month. The IMF board is expected to review the matter in late April.
Since the $1.1 billion is anticipated to be received in April, the State Bank of Pakistan’s foreign exchange reserves will not be significantly affected.
Meanwhile, investors have positive sentiments after the remittances grew and a financial package from Saudi Arabia for Pakistan as the two countries have jointly agreed to expedite the implementation of the first phase of a $5 billion package.
The month of Ramadan and Eid holidays led to a significant flow in remittances for March, reaching the $3 billion mark.
This robust figure has the potential to result in a current account surplus for the month.
