HKD/PKR Outlook:
Slightly weaker, but likely to move sideways as the rate is below its recent average and near recent lows.
Key drivers:
• Rate gap: The Hong Kong Monetary Authority's actions to support the HKD's peg to the US dollar contrast with challenges faced by the Pakistani Rupee, which is under pressure from geopolitical tensions.
• Risk/commodities: With oil prices remaining volatile, the impact on the PKR could exacerbate existing weakness, particularly given Pakistan's heavy reliance on oil imports.
• One macro factor: The ongoing inflationary pressures in Pakistan, projected around 6% for FY 2025-26, contribute to a decline in the PKR's value against other currencies.
Range:
The HKD/PKR is likely to drift within the recent range, testing its extremes as both currencies react to ongoing economic pressures.
What could change it:
• Upside risk: A significant improvement in geopolitical conditions or foreign investment could instill confidence in the PKR.
• Downside risk: Further deterioration in Pakistan’s economic outlook or additional geopolitical tensions may lead to further declines in the PKR.
