Pakistani rupee is expected to remain range-bound, fluctuating between 275 to 285 per US dollar until the International Monetary Fund (IMF) conducts its next review of Pakistan’s loan program.
The recent movement of the rupee in the interbank market has been considered unusual. After a steady increase, analysts say it experienced a sudden retreat and eventually strengthened at 278 per dollar.
The financial services platform Tresmark indicated that the foreign exchange market found some relief as the rupee-dollar parity maintained the Goldilocks Zone of 275–285. The rupee’s movement is anticipated to remain stable until the next IMF tranche is finalized. A possible wobble is expected during the upcoming monetary policy on October 30th.
If the IMF tranche progresses successfully, the rupee could potentially head towards the 270 level by mid-November, with the possibility of interest rate cuts between 100-200 basis points by the end of the year. Traders are predicting a relatively stable market next week, with the rupee potentially trading below 280 per dollar.
The State Bank of Pakistan’s forthcoming monetary policy review meeting, scheduled for October 30, is anticipated to maintain the benchmark interest rate at 22% due to the predicted decrease in inflation, lower fuel prices, and the strengthening of the local currency. Moreover, the recent balance of payment data indicates a substantial improvement, with Pakistan’s current account deficit (CAD) shrinking to $947 million in the first quarter of the fiscal year, reflecting a 58% decrease from the same period last year. This reduction in the trade gap has contributed to the decline in the current account deficit.
