Experts have warned that the Pakistani rupee is expected to depreciate in the coming days, unless confidence returns among investors and the International Monetary Fund (IMF) revives its bailout programme.
The rupee fell sharply last week from 262.6 to 276.58 against the US dollar in the inter-bank market, an all-time low.
“It seemed to have stabilised around the 270 level until the Prime Minister and Finance Minister spoke,” noted Tresmark in a report released on Saturday.
“When the PM said that the IMF is imposing harsh conditions and when the FM said they are looking for philanthropists for billions of dollars, traders assumed that the leadership was still looking for avenues other than IMF or that they will waste more time in negotiating with them,” it said.
“But in our assessment, the PM may have been only trying to prepare other stakeholders and vote base for harsh steps and measures,” the report said.
It added that “another more important factor in the rupee’s downfall was the steep decline in reserves which are now at $8.7 billion (down by $712 million).”
Data released on Thursday showed the State Bank of Pakistan’s (SBP) foreign exchange reserves dropped $592 million to a mere $3.09 billion, the lowest level of central bank reserves since February 2014.
Tresmark also said that the rupee will remain under pressure unless confidence returns among investors.
“Until and unless traders don’t feel confident of things to get better, especially the reserves situation, the rupee will continue to fall, irrespective of its level.
“Traders we spoke to think the 1st and 2nd level of resistance of 280/$ & 285/$ will be ceded in the coming week, unless the IMF comes on board.
“They also feel that 270-275/$ is the fair level post-IMF agreement, and any outruns will be temporary and will get corrected once there is some visibility of inflows,” it added.
Comments
Comments are closed.