HKD/PKR Outlook:
The HKD/PKR exchange rate is slightly weaker, but likely to move sideways, as it is trading just below its recent average and within the mid-range of its three-month fluctuations.
Key drivers:
• Rate gap: The HKMA's active interventions to support the HKD contrasts with the relatively stable position of the State Bank of Pakistan, which is maintaining its policy rate to control inflation.
• Risk/commodities: Steady oil prices support Pakistan's economic recovery efforts, benefitting the PKR through improved export performance.
• One macro factor: Increased foreign exchange reserves in Pakistan have contributed to a more stable PKR, reflecting signs of gradual economic recovery.
Range:
The HKD/PKR is likely to drift within its recent 3-month range as both currencies adjust to ongoing economic conditions.
What could change it:
• Upside risk: Further significant interventions by the HKMA could strengthen the HKD, pushing it towards recent highs.
• Downside risk: A deterioration in global economic conditions could undermine Pakistan's recovery, exerting pressure on the PKR.
