USD/PKR Outlook:
The USD/PKR rate is slightly weaker, but likely to move sideways as it trades below its recent average and is near recent lows. Recent developments have created a stable environment, but uncertainty remains.
Key drivers:
- Rate gap: The Federal Reserve's interest rate policies, which have led to capital inflows, contrast with the State Bank of Pakistan’s stable approach to maintain the PKR's value.
- Risk/commodities: Global uncertainty has kept demand for the USD as a safe haven, while the PKR benefits from consistent remittance inflows and export receipts.
- Macro factor: A recent crackdown by the Pakistani government against illicit activities is expected to help stabilize the PKR and maintain market integrity.
Range:
Expect the USD/PKR to trade within its recent range, likely holding steady without significant breaks in either direction.
What could change it:
- Upside risk: A stronger-than-expected US job report could shift focus back to the USD.
- Downside risk: Further progress in foreign exchange reserve recovery in Pakistan might bolster the PKR against the USD.
