Exchange rate stability doubtful in CY24

The rupee-dollar exchange rate is expected to come under pressure due to higher debt repayments in the first quarter of calendar year 2024, said bankers and analysts. “With the completion of the nine-month $3bn Stand-By Arrangement with the IMF in March 2024, the dollar may reverse its downward trajectory due to higher debt servicing and likely fall in foreign exchange reserves amid slow inflows,” said a senior banker. Bankers and analysts said the country is short of $6bn required to meet the debt servicing obligations totalling $24bn for the entire FY24. “The fundamentals have not changed. Remittances and export proceeds will either decline or remain stagnant,” said S.S. Iqbal, an expert on foreign exchange. The foreign direct investment would remain poor, he added. Economists believe the general elections on Feb 8 have already created uncertainty about the future economic policies of the next government.