The exchange rate forecast for the Saudi Riyal (SAR) to Pakistani Rupee (PKR) reflects a period of relative stability, with the SAR trading at 14-day highs near 75.70 PKR, just above its three-month average. The SAR has maintained a stable trading range of 1.6% recently, oscillating between 74.89 and 76.06 PKR. This stability is largely attributed to the riyal's strong peg to the U.S. dollar, valued at 3.75 riyals per dollar, and the broader economic environment surrounding both currencies.
Recent developments in Pakistan are influencing the PKR's trajectory. Analysts have noted that the State Bank of Pakistan's decision to maintain the key interest rate at 12%, following a halt to its easing cycle, indicates persistent inflationary pressures and significant economic risks. This decision, which follows a series of cuts starting in June 2024, suggests that the central bank is prioritizing economic stability over aggressive rate cuts.
Moreover, the recent agreement on a $4.47 billion loan with commercial banks to address the energy sector's circular debt may provide some relief to Pakistan's economic conditions, yet the ongoing geopolitical tensions in the region continue to pose challenges. The closure of airspace to Indian carriers has the potential to exacerbate economic disruptions further, putting additional pressure on the PKR.
Currency stabilization efforts by Pakistan's Inter-Services Intelligence, targeting black market dollar trading, have shown limited success, leading to a slight appreciation of the PKR against the dollar. Analysts suggest this could feed into a modest strengthening of the PKR against the SAR if these measures gain traction.
Overall, while the Saudi Riyal remains stable due to its pegged nature and positive external factors, the Pakistani Rupee's outlook may remain volatile with market participants closely monitoring interest rate decisions, fiscal interventions, and geopolitical developments. As these factors unfold, businesses and individuals engaging in international transactions may benefit from staying informed on fluctuation trends between the SAR and PKR.
