The Pakistani rupee is expected to remain within a narrow band, fluctuating between 285 and 286 against the US dollar in the coming week. This forecast arises from a meticulous analysis conducted by importers and exporters who are keenly assessing the influence of various economic indicators on the national currency.
Although the rupee initially experienced gains against the dollar earlier in the week, driven by optimism surrounding the completion of the first International Monetary Fund (IMF) review and a reduction in the current account deficit, challenges emerged later. Heightened demand for dollars from importers, coupled with exporter reluctance to sell foreign exchange holdings, led to a reversal of the rupee’s earlier gains.
The currency also grappled with pressure from rising inflation, a decrease in foreign exchange reserves, and uncertainty regarding future interest rates. Ending the week at 285.37 against the dollar, compared to 285.97 at the week’s start, the rupee’s outlook for the next week depends on the interplay of importers fulfilling end-of-month demand and exporters becoming more active.
Analysts anticipate a potential trading range of 285-286 against the dollar, unless significant positive or negative news disrupts this delicate balance. Despite minor setbacks in the last two sessions, the rupee’s resilience is attributed to factors such as an increase in the real effective exchange rate (REER) and a slight decrease in foreign exchange reserves.
