PKR/USD Outlook:
The PKR/USD exchange rate is likely to move sideways as it trades near its recent average and is within its 3-month range. Recent geopolitical uncertainties and steady foreign exchange inflows are contributing to this stability.
Key drivers:
• Rate gap: The Pakistan Central Bank's monetary stance remains cautious, while the Federal Reserve's rate hikes have strengthened the USD.
• Risk/commodities: The USD is buoyed by geopolitical tensions that keep demand for safe-haven assets like the dollar high.
• Macro factor: A gradual recovery in Pakistan's foreign exchange reserves, driven by positive remittance inflows, is supporting the PKR.
Range:
The exchange rate is expected to hold steady within its recent 3-month range, keeping fluctuations minimal.
What could change it:
• Upside risk: Strong economic data from the US that may prompt lower investor confidence in the dollar.
• Downside risk: Any further deterioration in geopolitical conditions that boosts safe-haven demand for the USD.