ISLAMABAD: According to Fitch Solutions, further depreciation of the Pakistani rupee is anticipated, especially given the weak balance of payments situation that the nation is expected to experience for a number of more months.
The rating agency noted that wider economic repercussions would result from the rupee’s continued depreciation. It may cause short-term increases in imported inflationary pressure and eventually lead to State Bank of Pakistan (SBP) policy rate increases that are more pronounced.
We currently anticipate that Pakistan’s economy will contract by 0.3 percent in fiscal year 2022–2023, which would only make the country’s already difficult economic outlook worse. However, the devaluation of the rupee will also assist Pakistan in obtaining additional payments from the International Monetary Fund (IMF), which wouldbe advantageous for the longer-term outlook as it would help ease Pakistan’s balance of payments strains,” it added. The rating agency further stated that one condition under the IMF’s External Fund Facility agreement is for Pakistan to move towards an exchange rate regime that is determined by market forces.
According to Fitch Solutions, further depreciation of the Pakistani rupee is anticipated, especially given the weak balance of payments situation that the nation is expected to experience for a number of more months.
The rating agency noted that wider economic repercussions would result from the rupee’s continued depreciation. It may cause short-term increases in imported inflationary pressure and eventually lead to State Bank of Pakistan (SBP) policy rate increases that are more pronounced.
We currently anticipate that Pakistan’s economy will contract by 0.3 percent in fiscal year 2022–2023, which would only make the country’s already difficult economic outlook worse. However, the devaluation of the rupee will also assist Pakistan in obtaining additional payments from the International Monetary Fund (IMF)
According to Fitch Solutions, their current prediction that the rupee will reach Rs248 per dollar by year’s end is no longer valid. According to the agency, there is still “considerable uncertainty at this point, making it challenging to assess the extent to which the most recent devaluation has caused investor sentiment to soar further.”
Once the dust has settled, we will therefore solidify our rupee forecasts over the ensuing weeks, according to the agency.
