Rupee to hover between Rs159.80 and Rs160.30 against US dollar next week, say analysts

• Rupee consolidated during this week due to CAD surplus, debt restructuring by Paris Club etc
• Current account surplus, debt restructuring by the Paris Club, and steady inflow in Roshan Digital account meant that the rupee consolidated during the week

The Pakistani rupee currency is expected to hover somewhere between Rs159.80 to Rs160.30 next week against the US dollar, said analysts on Sunday, adding that importers and the corporate sector were usually reluctant to take "fresh positions" during the last week of the year. 

"If any demand emerges, it is likely to be outstripped by inflows available in the market,” said a foreign exchange trader at a commercial bank. The rupee rose 48 paisas to close at 160.32 versus the greenback during the four sessions of the outgoing week. 

Financial markets had remained closed on Friday due to the Quaid-e-Azam Day and Christmas holidays.

A current account surplus, debt restructuring by the Paris Club, and steady inflow in Roshan Digital account meant that the rupee consolidated during the week. 

“Analysts, however expect the rupee to trade within 159/161 with possible retest of the 158 level in the next quarter. But most are unanimous that there will be no significant rupee strengthening,” said Tresmark in a research note.

Interest rates might be under pressure with stakeholders making a strong case for reducing rates.

While that could be beneficial, the central bank would like to keep balance and maintain the status quo, it said.

Structural witnesses were observed by analysts despite Pakistan reporting positive stats on the remittances, exports and cooperative multilateral flows' front. 

Fiscal deficit remains uncontrolled, poor tax collections, incoherent subsidies, lack of administrative controls, poor credit off take, and other crucial reforms were needed urgently to provide a sustainable ecosystem, said the report.

On the plus side, it seems like the International Monetary Fund was very close to continuing the Extended Fund Facility package.

This together with cooling off the FATF issue would assist Pakistan in better repackaging important reforms and generating international interest, the report added.

Pakistan’s foreign exchange reserves dropped to $20.313 billion during the week ended December 18 from $20.379 a week earlier.

Foreign reserves held by the State Bank of Pakistan decreased by $83 million to $13.216 billion on the back of the external debt repayments.