KARACHI: The rupee projected to trade range-bound in the interbank market next week due to administrative measures and a dollar shortage.
In the interbank market, the local currency fell to 287.15 per dollar on Tuesday. Before rising to 285.15 by the end of the week.
Default risks are rising as Pakistan’s economy worsens and its foreign exchange reserves run out.
The country is desperately trying to restart the $6.5 billion bailout with the IMF. But the present program ends on June 30.
Importers will demand dollars regularly due to import limitations. A forex broker predicted that the rupee not break 288 against the dollar.
“However, due to a lack of dollars and increased demand, the rupee appears weaker in the open market,” the dealer said.
On Friday, the rupee’s open market value fell to 310. It fell Rs5 against the dollar last week.
The currency rate gap between open and interbank markets reached Rs25, which may tempt abroad Pakistanis to send money home illegally.
Foreign exchange reserves decreased $206 million to $9.7 billion in the week ending May 19. The SBP’s reserves fell $119 million to $4.2 billion.
Commercial bank reserves declined $88 million to $5.5 billion, indicating wealth loss.
“While the interbank still looks to be range bound, grey market rates are poised to go up further as much of the non-formal imports are being settled through that market,” wrote Tresmark in a weekly report.
“Political unrest is rising. Political cooling affects the economy, as demonstrated in Sri Lanka. Due to the high base effect and softening of global commodities, May CPI is likely to climb to 39%.
