next week
\n KARACHI
\nThe rupee is expected to remain in a narrow range over the next week as the market focuses on State Bank of Pakistan\u2019s (SBP) interest rate decision, traders said. \u201cThe range-bound movements in the rupee that have been present this week, in our opinion, will continue as the market waits for the SBP monetary policy announcement, which is scheduled on Monday,\u201d said a foreign exchange trader. \u201cIf the SBP\u2019s MPC lowers the policy rate by 100 basis points (bps) as is widely anticipated, we do not believe that the local currency will see any volatility,\u201d the trader added.
\n\u201cDue to a deal with the International Monetary Fund (IMF) for a fresh $7 billion loan, the market expects the rupee to stay range-bound in the short to medium term,\u201d he said.
\nIn the interbank market on Monday, the rupee ended the day at 278.3 per dollar. On Wednesday, it lost ground and closed at 278.5 against the dollar; but, on Friday, it closed at 278.33.
\nTresmark in a note said that despite the significant improvement in inflation, analysts are predicting only a 100-bps reduction in Monday\u2019s MPC meeting.
\nThey argue that inflation, although lower, is still above average norms, deficits remain high, currency stability is crucial, and global interest rates, especially those set by the Fed, are expected to stay elevated. Larger-than-average fiscal deficits are skewing debt supply versus investor demand, leading to higher premiums. This noise causes discrepancies between actual and fair value.
\n\u201cIn our view, the primary reason policy rates remain elevated is due to a pronounced fear of another inflation surge and a need to maintain currency stability, which is a key performance metric for the government,\u201d it said.
\nTresmark\u2019s note states that the rupee experienced some negative events, such as the SBP\u2019s foreign exchange reserves declining by a substantial $397 million and Pakistan\u2019s programme agenda being left out of the IMF Board meeting. Despite these challenges, exporters continued to sell dollars forward up to the two-month tenor (but not beyond that), keeping the rupee essentially stable.<\/p>\n","protected":false},"excerpt":{"rendered":"
next week KARACHI The rupee is expected to remain in a narrow range over the next week as the market focuses on State Bank of Pakistan\u2019s (SBP) interest rate decision, traders said. \u201cThe range-bound movements in the rupee that have been present this week, in our opinion, will continue as the market waits for the […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":{"0":"post-421286","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-top-news"},"yoast_head":"\n