CAD/PKR Outlook:
The CAD/PKR rate is likely to move sideways, as it is currently near its 90-day average and within a stable range. There is no clear driver pushing for a change in momentum.
Key drivers:
- Rate gap: The Bank of Canada is maintaining a higher interest rate compared to the State Bank of Pakistan, which benefits the CAD against the PKR.
- Risk/commodities: Oil prices are currently significantly above their recent average, which typically supports the Canadian dollar but is tempered by the recent easing trend.
- One macro factor: The stable foreign exchange reserves in Pakistan indicate improving economic conditions, which could also support the PKR.
Range:
The CAD/PKR exchange rate is likely to hold steady within its recent 3-month range.
What could change it:
- Upside risk: A sharp increase in oil prices could strengthen the CAD significantly.
- Downside risk: Any deterioration in economic conditions or a drop in remittances could weaken the PKR.