Karachi: The rupee performed well this week, with an appreciation of Rs 1.05/$. After three consecutive weeks of losses, CA’s surplus was $73 million ($792 million in the first quarter), and its foreign exchange reserves increased by $287 million.
Traders have been paying close attention to REER. The latest figures of 93.10 and 91.69 for July and August have paved the way for further strengthening of the rupee. The June figure was also revised down to 93.04. Although this increased increase indicates that the rupee is undervalued, analysts pointed out two key factors to limit reliance on benchmarks. External and financial sustainability, and secondly, the index only accounts for 11% of the weight. Having said that, as long as regulators remain relevant, benchmarks remain crucial for traders.
The FATF’s statement was not surprising, and comments on the decision were mixed. Some analysts pointed out that the remaining six issues should be resolved in just four months, while other analysts believe that FATF and, more importantly, the efforts of the US government are the key points. In general, the market will take a positive attitude towards this and may pave the way for closer contact with the IMF.
Three global factors will determine the currency flow in the coming week. US elections, data and US stimulus measures. With the central bank’s monetary policy meeting held next week, these reports may affect immediate policy guidance. More specifically, there is widespread concern about the European Central Bank because it is widely expected that they will ease monetary policy before the end of the year. Although the Eurozone’s composite PMI index showed that it had resumed contraction, the unexpected rise in the composite index and manufacturing data was enough to enable euro traders to make up for Thursday’s decline. The EUR/USD not only closed at a one-month high, but it was also the best performing stock on Friday.
In the United States, Pelosi, the Speaker of the House of Representatives, expressed hope that it will continue to exist. She said that if President Trump supports the election, the election can be passed. However, after Finance Minister Mnuchin said there were still “significant differences”, the stock was sold.
With the exception of the British pound, the U.S. dollar traded lower against most major currencies. PMI is the main focus, and to everyone’s surprise, economic activity in October did not slower than expected as in most countries.