USD/PKR Outlook: Slightly weaker, but likely to move sideways, as the rate is below its recent average and within its stable range.
Key drivers:
• Rate gap: The U.S. Federal Reserve is expected to continue cutting rates, while the State Bank of Pakistan is holding its policy rate, creating differential pressure on the USD.
• Risk/commodities: The declining trend in oil prices may impact both currencies, particularly affecting the PKR given its reliance on oil imports.
• One macro factor: Fitch Ratings forecasts a significant depreciation of the PKR, adding pressure on its value against the USD moving forward.
Range: The USD/PKR is likely to drift within its recent range, with minor fluctuations but without significant volatility.
What could change it:
• Upside risk: A shift in geopolitical tensions or strong U.S. economic data could lead to unexpected strengthening of the USD.
• Downside risk: Continued signs of economic weakness in the U.S. or aggressive depreciation forecasts for the PKR could further soften its value.
