USD/PKR Outlook:
Slightly weaker, but likely to move sideways, as the rate is below its recent average and trading near recent lows without a clear driver.
Key drivers:
• Rate gap: The Federal Reserve's decision to hold interest rates steady contrasts with Pakistan's ongoing inflationary pressures, maintaining a weaker PKR.
• Risk/commodities: A decline in oil prices globally could support the USD while creating further pressure on the PKR due to Pakistan's reliance on imported energy.
• One macro factor: Geopolitical tensions and trade disruptions have negatively impacted the PKR, leading to a significant depreciation against the USD.
Range:
Expect the USD/PKR to hold within its recent range, showing limited movement as both currencies face external pressures.
What could change it:
• Upside risk: A surprise improvement in US job data could strengthen the USD and push the rate higher.
• Downside risk: Continued geopolitical instability in the region could further weaken the PKR.
