Currency markets are believed to be under control, even though analysts are refraining from predicting interest rates due to political reasons…
- The rupee ended the week at 279.33 against the dollar on Friday.
- Currency markets are believed to be under control: report.
- The rupee is expected to remain stable over the next two weeks.
KARACHI: Pakistan’s rupee will face a stability test in the coming weeks as it continues to grapple with a political crisis after the February 8 general elections. the news reported Sunday.
The local currency was little changed in the interbank market this week, closing at $1:279.36 on Monday, compared to $279.33 on Friday.
Pakistan suffered its worst election in years after a chaotic election on February 8 that sparked allegations of election fraud and protests by the Pakistan Tehreek-e-Insaf (PTI), whose campaign was led by independent candidates. is facing a political crisis.
The former ruling party staged nationwide protests on Saturday demanding a re-run of the polls, saying they were rigged in favor of the Pakistan Muslim League-Nawaz (PML-N).
In a note to clients, Tresmark said Moody’s had issued a “credit negative” signal for Pakistan in the face of prolonged political uncertainty and social unrest.
“Many think tanks have criticized Pakistan for being an authoritarian regime. “This will make it difficult to approach the IMF (International Monetary Fund) and launch new programs.”
“The economic impact could be clearly planned.”
Currency markets are believed to be under control, although analysts have refrained from predicting financial market rates due to political uncertainty.
“In this environment, there is a view that the rupee will stabilize over the next two weeks, which is approximately when a new government takes office. By then, Ramadan remittances will help keep the rupee stable. “I guess so,” Tresmarck said.
The second week of March marks the beginning of Ramadan and ends with Eid-ul-Fitr in the second week of April, when remittances typically increase.
Remittances from Pakistani nationals employed abroad totaled $2.4 billion in January, an increase of 26.2% from the same month last year.
However, remittances declined in the first seven months of the 2023/2024 financial year. These inflows amounted to $15,832 million from July to January FY24, down 3% year-on-year.
Tresmark said the new government may not want to change the status quo of the “stable” rupee.
It is only from March onwards that the impact of the IMF negotiations will be felt, for better or worse, and the inflow of funds from bilateral and multilateral partners will begin to be felt. This is also the repayment period for $1 billion.
“Interestingly, the interbank foreign exchange market has been very lackluster in recent days, with financial institutions [financial institutions] “I have no intention of taking on any new or long-term positions.”
“As such, markets are likely to remain range-bound into March, although traders warn that political turmoil could worsen further.”
