USD/PKR Outlook:
Slightly weaker, but likely to move sideways due to current positioning just below its 90-day average and near the mid-range of its recent trading.
Key drivers:
- Rate gap: The Federal Reserve has held interest rates steady while geopolitical tensions are pressuring the PKR.
- Risk/commodities: The ongoing decline in oil prices is influencing inflation expectations, which may keep the PKR under pressure.
- One macro factor: High inflation in Pakistan is forecasted around 6%, complicating the currency’s stability.
Range:
Expect the USD/PKR to drift within its recent range, likely holding within the current levels as economic factors balance out.
What could change it:
- Upside risk: A recovery in US economic data could boost the dollar further.
- Downside risk: Further geopolitical tensions could lead to additional depreciation of the PKR.
