The Pakistani rupee may continue to remain weak on the interbank market, as the Pakistan political crisis keeps investors on edge. On the foreign exchange market, Pakistani Rupee closed moderately higher against the US dollar settling at 155.20, registering a 0.06 gain. During early Asia trading hours, the USD/PKR exchange rate was seen quoted higher at 155.58.
The State Bank of Pakistan (SBP) reported that the Pakistani Rupee was traded at Rs 155.35 against Rs 156.40 in the currency market in a very narrow trading range.
The World Bank annual report sees lackluster figures for Pakistan’s economic activity. The World Bank forecast for the next two years is gloomy mainly due to both fiscal deficits and current account deficit.
Pakistan’s GDP growth slowed to 3.3% in the fiscal year 2019 versus 5.5% in the previous year. The 2.2% decline versus the prior year was mainly driven by the monetary policy undertaken by the Pakistan authorities. For the fiscal year 2020, the World Bank only projects economic growth of 2.4%
The new stabilization measures have taken a toll on the domestic currency exchange rate, which suffered a snowballing depreciation of 25.5% in 2019. However, despite Rupee crashing on the currency market, the World Bank believes Pakistani Rupee is overvalued by 4.8%.
The benchmark equity index Karachi Stock Exchange KSE-100 Index closed up 0.21% at 37875 on Tuesday. Year-to-day the Pakistan stock exchange market is up 2.54%. The Pakistan 10-year government bond yield gaped higher and closed at 11.649 versus 11.376 previous closing rates.
On the other hand, the dollar index, which gauges the greenback’s strength against a basket of major currencies, was seen settling down at 98.25 on Tuesday close but recovered its losses during the London trading hours.
USD/PKR Technical Pattern
On the technical front, the USD/PKR exchange rate is trying to challenge again the unofficial peg established at the 155.00 support level. In the short-term, the Pakistani Rupee has stabilized above round number 155.00.