The exchange rate forecasts for the Canadian Dollar (CAD) to Pakistani Rupee (PKR) suggest a complex and variable outlook influenced by various domestic and international factors. Recent analysis indicates that the CAD is facing downward pressure due to soft oil prices, which have historically affected its performance as a commodity-linked currency. The CAD is currently trading at 14-day lows near 203.2 PKR, reflecting a 1.5% dip from its 3-month average of 206.3 PKR, and has remained within a stable 3.3% trading range from 202.9 to 209.5 PKR.
Analysts have noted an increase in bearish sentiment towards the CAD, with net short positions reaching a five-month high. This sentiment follows disappointing employment data, which has fueled expectations for potential interest rate cuts by the Bank of Canada (BoC). Following reports of an unexpected loss of 65,500 jobs in August and a rising unemployment rate, market expectations have shifted significantly. As a consequence, the CAD underperformed against all G10 currencies in the immediate aftermath of this news.
Despite this bearish outlook, some analysts remain optimistic. A Reuters poll conducted in early September suggests a potential strengthening of the CAD over the coming months, forecasting a rise to 1.36 per U.S. dollar in three months and to 1.3415 within the next year, driven by expectations that the BoC may soon end its cycle of interest rate cuts. Additionally, fluctuations in oil prices are critical; the recent increase in oil prices to $62.29 per barrel—following an OPEC+ decision—could provide some support to the CAD, although current oil price levels are still 2.9% below their 3-month average.
For the Pakistani Rupee (PKR), recent developments highlight a delicate balance of factors impacting its strength. The State Bank of Pakistan's decision to lower interest rates in July to 10.5% following cooling inflation reflects an attempt to stabilize the economy, but geopolitical tensions with India and a crackdown on black market dollar trading add layers of uncertainty. The recent trade agreement with the U.S. could offer some economic stability, yet the evolving dynamics of informal dollar trading complicate matters.
Given the interplay of these factors, businesses and individuals engaging in CAD/PKR transactions should remain vigilant. Markets may experience volatility influenced by both oil price movements and domestic economic indicators, making it prudent to monitor these developments closely for more favorable exchange rates.
