The rupee is likely to make some recovery against the dollar next week due to significant rise in the key policy rate.
The Monetary Policy Committee in its meeting on November 19, 2019 decided to increase the key policy rate by 150 basis points to 8.75 per cent. The decision was unexpected for the market but, according to the central bank, the tightening of policy rate may ease pressure on the local currency and arrest inflation.
The State Bank of Pakistan in the last few weeks has taken a number of measures to discourage demand for the dollar for external payments. However, efforts of the central bank resulted in a failure. —TLTP