How will Turkish Lira depreciation affect Pakistani Rupee?
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LAHORE: Pakistani Rupee is likely to be affected with a steep fall in the value of Turkish lira in the last two weeks.
Economic experts believe that it’s after effects may impact the Pakistani economy in the shape of a possible currency devaluation.
“Pakistan’s current account deficit is among the highest in emerging markets (EM) countries, and the currency is sliding. The Turkish lira is now the cheapest currency in EMs, but the Pakistani Rupee is only fair value.
It would need to fall another 30 to 40 per cent to be as cheap as the Turkish lira. Luckily, Pakistan’s central bank has been allowed to respond appropriately with interest rate hikes and allowing the currency to weaken. These measures and a potential IMF deal, might allow Pakistan to avoid a crisis, says Charlie Robertson Global Chief Economist, Renaissance Capital.
On August 13, the Turkish currency stood at 6.95 liras for one US dollar after falling 1.39 liras since August 9, igniting fears that the effects of its fall may be felt in other emerging markets as well.
Turkish companies that have borrowed dollars from European banks to fuel growth are finding it harder to repay the loans as lira loses value.
