MAHARASHTRA, India – Against the US dollar, the rupee tracked new gains in the open market as well as inter-bank the previous week, largely boosted by strong inflows of foreign investors, while the optimistic macroeconomic indicators also assisted on the recent appreciation of the currency.
The rupee ended the trading session on Monday marginally higher at 155.28 points against the greenback, and closed the last trading day of the week, Friday, at 155.06 points against the US dollar.
In the open market, the rupee recorded modest gains, rising 25 paisas to close the week at 155.10 against the US dollar.
Forex market players are expecting the rupee to continue its upward trend against the dollar, gaining a few more points during the upcoming week. According to one currency dealer, the market is seeing an increase in foreign inflows in the last couple of days. The currency dealer also stated that the strength of rupee during the previous trading week was mostly boosted by the optimistic economic outlook, stability of foreign exchange reserves, as well as lower current account shortage.
He also added that most other currency dealers are expecting further gains for the rupee in the coming trading days, with the next level is at 154.50.
The major backing for the local currency is the increased inflows, which further boosted the supply of the dollar in the market.
With Moody raising the outlook for Pakistan from negative to more stable, plus the much better rating for five of the key banks, the country’s economy has seen positive developments from the outgoing weeks.
Based on a statement from Moody, the upgrade on Pakistan’s outlook from negative to stable was mainly driven by the market sentiments that the balance in terms of payments dynamics will keep going better, along with the currency flexibility and policy adjustment supports.
The rating agency also said that those kinds of developments in the country recently has helped reduce the risks in external vulnerability, despite the low buffers of the foreign exchange reserves.
The country has also gained the Asian Development Bank’s approval for an emergency loan as budgetary support valued at $1 billion.
Further, Pakistan also received around 100 million euros during the week, which came from the settlement between the British government and Malik Riaz, while the forex reserves in the central banks rose to$9.112 billion during the week, from its previous $431 million.
State Bank of Pakistan’s increasing number of foreign exchange reserves was primarily caused by limitations imposed in the foreign exchange trading as well as the central bank’s forward liabilities.