Shocking claims made about Pakistani Rupee value against US Dollar
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Goldman Sachs Group Inc. has expressed concerns about the recent surge in the Pakistani rupee, suggesting that these gains may be short-lived. Despite the Pakistani rupee's impressive performance on the global stage in the past two months, Goldman Sachs is skeptical about its sustainability due to the country's financing risks.
Initially, the rupee had experienced a significant decline, reaching a historic low of 307 to the US dollar in early September. However, it has since rebounded by more than 8%, now trading at 280 to the dollar. This remarkable recovery ranks as the largest increase among all world currencies over the last month, primarily attributed to the government's crackdown on illegal dollar trading.
Nevertheless, Goldman analysts, led by Kamakshya Trivedi, have issued a cautionary outlook on the Pakistani rupee's recent appreciation. They point to rising interest costs faced by Pakistan and the absence of long-term agreements with the International Monetary Fund (IMF) and bilateral financing to stabilize the country's external balance.
This instability is amplified by concerns among investors about political uncertainty in Pakistan and potential governmental changes following upcoming elections, prompting them to invest in the Pakistani rupee with hopes of future gains.
This increased demand for Pakistani rupees has resulted in its strengthened value against other currencies, potentially leading to higher costs for purchasing foreign currency-denominated goods and services. The report warns that this trend is likely to persist as the elections approach, potentially causing further price increases.
Goldman Sachs further anticipates that the Pakistani rupee may face future devaluation due to the country's financial challenges, including difficulties in meeting debt obligations and maintaining economic stability.
