EUR/PKR Outlook: Slightly positive, but likely to move sideways, as the rate is above its recent average yet lacks a strong driving factor.
Key drivers:
• Rate gap: The European Central Bank's ongoing neutral monetary policy contrasts with the Pakistani central bank's need for potential stabilization measures due to inflationary pressures.
• Risk/commodities: Oil prices are currently above their recent average, which may indirectly affect the PKR due to increased import costs impacting trade balances.
• One macro factor: The gradual depreciation forecast for the PKR amidst economic reforms may add pressure on the exchange rate in the long run.
Range: The EUR/PKR is likely to hold its current position within the recent range as both currencies experience limited movement.
What could change it:
• Upside risk: Any unexpected improvement in Eurozone inflation or economic data could strengthen the euro further.
• Downside risk: A faster-than-expected depreciation of the PKR due to ineffective economic reforms could weaken the exchange rate.
