AUD/PKR Outlook:
The AUD/PKR is likely to increase, trading well above its recent average and near recent highs. This trend is supported by stronger commodity prices and the Australian dollar's overall bullish performance in recent weeks.
Key drivers:
• Rate gap: The Reserve Bank of Australia (RBA) maintains a cautious approach, contrasting with the relatively stable monetary policy in Pakistan, influencing capital flows towards the AUD.
• Risk/commodities: The rise in oil prices has positively impacted Australian exports, strengthening the AUD against the PKR amid higher global demand.
• Macro factor: Robust foreign exchange reserves in Pakistan are offsetting instability, yet the reliance on steady remittance inflows and export earnings limits the PKR's strength.
Range:
The AUD/PKR is expected to drift within its recent range, likely holding above its current levels but facing resistance due to market volatility.
What could change it:
• Upside risk: A surprise interest rate hike by the RBA could further boost the AUD.
• Downside risk: A deterioration in global risk appetite or heightened geopolitical tensions could put downward pressure on the AUD.