KARACHI: The rupee is likely to stay under pressure against the dollar next week because the lack of foreign inflows may hurt market sentiments.
The rupee hit an all-time low against the dollar by the end of the outgoing week at Rs175.73 on November 12, 2021 in the interbank foreign exchange market.
The external payment pressure, including large import payments, kept the local current under pressure during the outgoing week. During the outgoing week, the rupee lost Rs5.72, or 3.36 per cent, against the dollar.
The rupee after witnessing the previous historic low of Rs175.57 on October 26, 2021 recovered some value after an announcement made by the Saudi government to help Pakistan manage the balance of payments position.
However, the delay in the transfer from the Saudi Arabia hurt the sentiments in the foreign exchange market and the rupee started depreciating.
The Saudi government pledged an amount of $3 billion on October 26, 2021 that was to be transferred directly to the State Bank of Pakistan (SBP); however, a Saudi diplomat during the outgoing week said the cash transfer under the package would be made soon.
Besides the Saudi pledge, the market was also waiting for the International Monetary Fund (IMF) tranche. The negotiations between the Pakistani authorities and the IMF are in progress and it is hoped that the country would win the confidence of the IMF for the next tranche.
Another major issue that deteriorated the local unit is large import bill. After ease in the coronavirus cases, the economy returned to normalcy, which escalated the demand for the imported raw materials and finished products.
The import bill registered a growth of 65.15 per cent to $25.06 billion during July-October 2021, compared with $15.17 billion during the same period of the last fiscal year, according to the Pakistan Bureau of Statistics.
Analysts said the country desperately needs improving export receipts and workers remittances to support the local unit and feed the external payments requirement.
The exports of the country registered an increase of 24.71 per cent to $9.44 billion during the first four months (July-October) of the current fiscal year, compared with $7.57 billion in the corresponding months of the last fiscal year.
The State Bank of Pakistan (SBP) has not issued the latest number of remittances. However, overseas Pakistanis have sent $8.034 billion during the first quarter (July-September) of the fiscal year 2021/22.
The inflows of home remittances during the first quarter registered a growth of 12.5 per cent, compared with $7.143 billion in the corresponding period of the last fiscal year.
The rupee remained under pressure since the start of the current fiscal year. The local currency fell Rs18.19, or 11.55 per cent, from June 30, 2021 closing of Rs157.54 to the closing of Rs175.73 on November 12, 2021.