KARACHI: State Bank of Pakistan (SBP) has predicted that rupee to keep its position against the dollar next week after an improvement in inflows in debt securities and lethargic demand for the foreign currency for import payments.
According to the State Bank of Pakistan (SBP), foreign participants invested close to $2.5 billion in Market Treasury Bills (MTBs) and Pakistan Investment Bonds (PIBs) from July 1, 2019, to January 23, 2020.
The inflows in debt securities are likely to increase due to the smart rate of returns. The SBP is scheduled to announce its new policy rate on Tuesday for the next two months.
The present policy rate is 13.25 percent, and considering the inflationary pressure, the central bank is unlikely to review any downward revision, according to the publication.
The import bill of the country fell 16.9 percent to $23.23 billion from July–December (2019/20), compared with $27.95 billion in the corresponding period of the last fiscal year.
This helped the country narrow the trade deficit by 30 percent. The trade deficit shrank to $11.69 billion in the first half of the current fiscal year, compared with the deficit of $16.77 billion in the corresponding half of the last fiscal year.
The rising foreign exchange reserves of the country may also help the local unit to stay stable in the coming days. The foreign exchange reserves held by the SBP rose to $11.586 billion as of January 10 from $11.503 a week ago.
The local currency may also move during the next week on the positive reports regarding Pakistan’s status in the Financial Action Task Force (FATF).
Some reports suggested Pakistan would come out of the ‘grey list’ of the FTAF after the meeting of the working group held in Beijing, China.
During the week (January 20 to 24) the rupee gained three paisas after starting the week at Rs154.59 to end at Rs154.56 against the dollar in the interbank foreign exchange market.
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