Global Forecasters See Pak Rupee in Trouble

The Pakistani rupee is expected to massively lose its value in the near future according to Trading Economics global macro models and analysts’ expec­tations. The agency estimates PKR to trade at Rs 317+ against the US Dollar in 12 months.

Trading Economics offers statistics for 196 nations, including historical data and projections for economic indicators, currency exchange rates, stock market indices, government bond yields, and commodity prices.

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.

Bank of America (BofA) Securities also predicted that Pakistan’s currency could devalue to Rs 340 against the US dollar due to high domestic borrowing, substantial interest payments, and the need to restructure unsustainable debt in 2024 and 2025. BofA Securities expects inflation to remain high over the next few years, with a projection of 26% 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 22%.

BoFA stated in its report titled “Pakistan Viewpoint – Running out of ‘orthodox’ options,” that although they believe the Pakistani rupee may have already reached its fair value at Rs 286 against the USD, the high domestic borrowing of Rs 2.5 trillion could weaken it by another 15-25% to around Rs 340 to a dollar.

Like everything else, the currency devaluation will have a massive impact on the local auto industry which is already struggling due to insufficient localization, cap on CKD imports, unjust high prices of cars, and woefully depleting sales.

Source: Dawn

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