USD/PKR Outlook:
The USD/PKR exchange rate is currently likely to move sideways as it sits just below its recent average and near its three-month highs. This position indicates a balance of upward and downward pressures.
Key drivers:
- Rate gap: The Federal Reserve's tighter monetary stance continues to support the USD, contrasting with the State Bank of Pakistan's stable policy rate aimed at inflation control.
- Risk/commodities: Oil prices are volatile, with rising trends potentially benefiting the USD against the PKR due to Pakistan's reliance on energy imports.
- One macro factor: Signs of economic recovery in Pakistan, such as improved foreign exchange reserves, are helping stabilize the PKR against external pressures.
Range:
The USD/PKR is expected to hold its ground, trading within the recent range of 277.6 to 282.5 with limited volatility.
What could change it:
- Upside risk: A stronger-than-expected US GDP report could boost the USD further.
- Downside risk: Any renewed concerns over Pakistan’s economic stability or rising inflation could weaken the PKR.