Global forecasters see rupee in trouble
WASHINGTON: The Pakistani rupee is expected to trade at 293.52 by the end of this quarter, according to Trading Economics global macro models and analysts’ expectations.
Looking forward, the agency estimates the PKR to trade at 317.29 in 12 months.
Trading Economics provides its users with information for 196 countries including historical data and forecasts for economic indicators, exchange rates, stock market indexes, government bond yields and commodity prices.
The agency notes that the USD-PKR decreased 0.2000 or 0.07pc to 276.7500 on Thursday from 276.9500 in the previous trading session.
The USD-PKR spot exchange rate specifies how much one currency, the USD, is currently worth in terms of the other, the PKR.
While the USD-PKR spot exchange rate is quoted and exchanged on the same day, the USD-PKR forward rate is quoted on the current day but for delivery and payment on a specific future date.
On Wednesday, Bank of America (BofA) Securities predicted that Pakistan’s currency could devalue to Rs340 against the US dollar due to high domestic borrowing, substantial interest payments, and the need to restructure unsustainable debt in 2024 and 2025.
The Pakistani rupee closed at Rs277.41 against the US dollar in interbank on Wednesday.
BofA Securities expects inflation to remain high over the next few years, with a projection of 26pc in FY24. They also anticipate that Pakistan’s central bank’s key policy rate may rise to 25% in the year, compared to the current rate of 22pc.
BoFA stated in its June 30 report titled “Pakistan Viewpoint – Running out of ‘orthodox’ options,” that although they believe the Pakistani rupee may have already reached its fair value at Rs286 against the USD, the high domestic borrowing of Rs2.5 trillion could weaken it by another 15-25pc to around Rs340 to a dollar.
Published in Dawn, July 7th, 2023