AUD/PKR Outlook:
The outlook for AUD/PKR is likely to increase as it stands significantly above its recent average and is at multi-month highs, supported by strong Australian economic indicators.
Key drivers:
• Rate gap: The Reserve Bank of Australia has recently raised interest rates to combat inflation, while the State Bank of Pakistan struggles with economic challenges, widening the rate differential.
• Risk/commodities: Rising demand for Australian exports, notably driven by China's economic activity, continues to strengthen the AUD, especially in comparison to the PKR.
• One macro factor: Recent inflation data from Australia is higher than expected, raising speculations of further rate hikes, which could bolster the Australian dollar.
Range:
Expect AUD/PKR to hold at current levels, given its position near recent highs but subject to volatility.
What could change it:
• Upside risk: Unexpected economic improvement in Australia could lead to additional rate hikes.
• Downside risk: Continued geopolitical tensions in Pakistan might exacerbate the PKR's decline.
