Pakistan rupee slips further: Should you wait or remit now?

Dubai - Currency, though, is expected to remain stable; industry experts encourage to send remittances now.

After plunging more than four per cent in just one day on Tuesday, the Pakistani rupee is expected to remain stable in the next few months, hence expatriates should remit their funds now to cash in on strong rates, according to industry analysts.
They, however, also hinted towards a further slide in the currency later; it could hit 32 against the dirham.
The State Bank of Pakistan (SBP) allowed its currency to slide to a more-than-10-year low of 31.38 against the dirham on March 21 from 30.11 the previous day. Analysts attributed it to the apex bank's move to adjust the current account deficit and payment pressure due to an increase in imports lately.
"The rupee is expected to remain around the current levels for the next couple of months at around 31.15. Another such slide which many foreign exchange traders are expecting in a year's time, which would see levels below 32 against the dirham. The SBP permitted the free-fall of the rupee by around 4 per, cent which many suspect is to adjust the current account deficit and payment pressure due to increase in imports lately," said Rajiv Raipancholia, CEO of Orient Exchange in Dubai.
He advised expats who have any short-term requirements to remit money to take advantage of the rupee's drop.
Pakistan's trade balance widened to $18 billion during the first half of the current fiscal year, one-fourth higher than the previous, according to the Pakistan Bureau of Statistics.
SBP data showed that overseas Pakistanis remitted $12.8 billion in the first eight months from July 2017 to February 2018. From the UAE, remittances amounted to $332.18 million during the period. while foreign exchange reserves fell to $12.1 billion in January 2018, equivalent to 2.5 months of import cover.
Adeeb Ahamed, managing director of Lulu Exchange, believes the rupee slide was mostly market-driven.
"With American sanctions on the anvil, there has been a deficit of fund movement. Political factors also play a role in aiding the currency slide. The rupee has more or less reached a stable rate and we do not expect it to touch 32 any time soon. We expect the rupee to move between 31.30-31.80 in the coming few days," Ahamed added.
Going forward, Ahamed sees the United States' stand on Pakistan, along with the emerging political scenario in the coming months, will dictate the rupee movement to some extent.
He also echoed Raipancholia, saying: "It is a good time to send as we expect the rupee to remain stable for the next couple of months."
Promoth Manghat, CEO of UAE Exchange, says further weakness in the rupee cannot be ruled out in the coming months because of local and global circumstances. He sees the 32 level - or even higher - against the dirham is highly plausible.
Manghat says a depreciated home currency value is always good news for remittances.
He sees remittances to Pakistan spike up temporarily, especially due to big-ticket senders taking advantage of the situation. But regular remitters for family maintenance will continue to send irrespective of the currency fluctuation.
Sudhesh Giriyan, chief operating officer of Xpress Money, noted that there has been a talk of devaluation of the rupee of late.
He said in the recent past, a lot of currencies have been depreciating, such as the Philippine peso and Indian rupee as the US dollar became stronger amidst the US Federal Reserve's rate hike expectations.
"The Fed could be a factor. Most of the currencies are losing because a Fed rate hike is coming. That is a sign of the dollar getting stronger. Most of the subcontinent's currencies have been losing against the dollar," he said, adding that elections are approaching in Pakistan, which will have an impact on how the rupee behaves in coming months.
"The central bank just allowed rupee to depreciate but it will not allow the currency to depreciate left, right and centre. Either the rupee will stay at this level or may slightly appreciate. But I don't see rupee going to 110," he said.
The rupee was trading at 114.4 against the greenback on Wednesday after hitting 115 the previous day.
Giriyan believes it is a good level for Pakistan from a remittances perspective.
- waheedabbas@khaleejtimes.com

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