US Dollar to hit Rs 340 against PKR by June 24: report
Shares
Topline Securities, a brokerage firm, anticipates that the exchange rate between the Pakistani Rupee (PKR) and the US Dollar (USD) in the interbank market will likely fall within the range of Rs. 320-340 by June 2024. In their PKR outlook report, the brokerage firm noted that recent government actions have led to the PKR strengthening both in the official interbank market and the open market.
The report mentioned that since the caretaker government assumed control, the PKR faced pressure due to speculation that the non-political caretaker administration might allow the currency to adjust in accordance with International Monetary Fund (IMF) directives. Consequently, the PKR experienced a 6 percent decline in the interbank market (from Rs. 288 to Rs. 307) and a 10 percent drop against the USD in the open market (from Rs. 296 to Rs. 328) between August 14, 2023, and September 4, 2023.
It also highlighted that the recent surge in the USD value, post-August 14, primarily occurred in the open and black markets, leading to a premium increase (open market rate vs. interbank rate) from 1-2 percent to 6-7 percent. In response to this trend, the caretaker government, in collaboration with the State Bank of Pakistan (SBP), implemented several measures to curb demand in the open market.
Consequently, over the past 9 working days, the PKR has gained strength. In the interbank market, the PKR appreciated by 4 percent, rising from Rs. 307 to Rs. 296 against the USD. Simultaneously, in the open market, the PKR increased by 10 percent, going from Rs. 328 on September 4 to Rs. 298 as of September 18.
Despite this recent recovery, the PKR has been one of the poorest-performing currencies in recent years, with a 22 percent decline in 2022 and a 23 percent decrease in 2023 so far against the USD. Factors such as the external financing gap, challenging global financial markets, and local political instability have significantly impacted foreign exchange reserves, which currently provide less than 2 months of import cover, putting pressure on the rupee.
