HKD/PKR Outlook: Slightly positive, but likely to move sideways, as the rate is below its recent average and lacks a clear driver.
Key drivers:
• Rate gap: The interest rate differential favors the U.S. dollar over the Hong Kong dollar due to HKMA interventions, maintaining a near-zero rate for the HKD.
• Risk/commodities: Global oil prices are fluctuating; if they rise, it could add pressure on the PKR due to import costs, while a drop in oil could help stabilize the currency.
• One macro factor: The PKR has shown signs of stabilization against the U.S. dollar, indicating improved market confidence which could support its performance.
Range: The HKD/PKR is expected to hold within its recent 3-month range, without significant movements towards either extreme.
What could change it:
• Upside risk: A notable increase in Hong Kong's capital inflows could strengthen the HKD.
• Downside risk: A further deterioration in the economic outlook for Pakistan could lead to a depreciation of the PKR.