KARACHI: The rupee traded in a narrow range this week and is likely to continue this trend in the coming sessions, thanks to stable foreign exchange reserves and a reversal of negative sentiment following the US decision to pause its sweeping tariff hikes for 90 days on most countries.
On Monday, the rupee ended weaker at 280.56 against the dollar in the interbank market due to growing concerns about the economic repercussions of the US’s new tariffs, which unsettled global financial markets and local equities. The local currency continued to lose ground, dropping to 280.77 on Wednesday. However, it made a recovery by the end of the week, closing at 280.46 per dollar on Friday.
Last week, the US imposed significant taxes on imports from its trading partners, including a 29 per cent levy on imports from Pakistan. In a dramatic response, China raised its tariffs on US imports from 84 per cent to 125 per cent, retaliating against President Donald Trump’s decision to increase duties on Chinese goods to a total of 145 per cent, even after pausing many of his latest tariff hikes on other countries.
“We expect the rupee to remain range-bound next week and find it unlikely that it will cross the 280 mark,” a currency dealer said.
“The stable foreign exchange reserves and the reversal of negative sentiment are expected to help the rupee trade in a range-bound manner,” the dealer added.
Foreign exchange reserves held by the State Bank of Pakistan slightly increased by $23 million to $10.7 billion during the week ended April 04.
Tresmark, a financial terminal, expects the rupee to remain steady in the near-term.
“We expect minor corrections — 5-10 paisa per week — but nothing more substantial. Could that change post-June? Possibly. But in a world this fluid, June feels like a lifetime away,” it said in a client note on Saturday.
According to Tresmark, there is a greater likelihood of an interest rate cut in May. Every country is now searching for ways to cushion this shock. “The MPC [Monetary Policy Committee] should even consider meeting earlier to assess the fallout and offer relief where it matters,” it said.
“While the SLA [staff-level agreement] is done, there is no date for the IMF Executive Board review. Some analysts expect approval by month-end. But if it does not come before the budget, it could become a challenge for the government,” it added.
According to the report, it is easy to say markets are volatile or panicked — but behind the headlines, trillions of dollars have vanished, companies are collapsing, and families are getting crushed. That’s what’s unfolded over the past two weeks, as the US took on China in a financial war — and the rest of the world got caught in the crossfire. As a result, the dollar index dropped below 100, oil crashed 20 per cent, the euro hit a three-year high, gold reached an all-time high, and bond yields surged 20 per cent.
