KARACHI: Pakistani rupee likely devalue to PKR 270 against the dollar by end of the current fiscal year or June 30, 2023, a report said on Saturday.
The report released by Topline Securities, predicted that rupee to reach PKR 270 by Jun 2023 with FY23 average of Rs241.
With PKR likely to weaken further, inflationary pressure may persist even after 900bps increase in policy rate by SBP in last 1.5 years, the report added.
Pakistan currency is going through lot of uncertainty in spite of 21 per cent fall in PKR against US Dollar in 2022 so far.
Since 2019 Pakistan is following a market-based exchange rate regime. Even though official exchange rate remains in the range of Rs221-225 in recent past, black market rate is trading at a premium of more than 10 per cent at Rs240-250.
The report said that since State Bank of Pakistan (SBP) has tightened rules for exchange companies, there is hardly any foreign currency supply in the open market except for few currencies available for travelers at a premium of 3 per cent.
This reemergence of black market with 10 per cent difference, analysts at the Topline Securities believe, cannot continue for long as it has started affecting USD inflows especially inward remittances.
Given low foreign reserves, it is highly likely that the official exchange rate will adjust to close to black market rate.
As per their base case, the analysts expect PKR to reach Rs270 by Jun 2023 with FY23 average of Rs241. With PKR likely to weaken further, inflationary pressure may persist even after 900 basis points increase in policy rate by SBP in last 1.5 years.
Now with SBP revising its FY23 estimate of CPI to 21-23 per cent, they think interest rates to remain at higher levels. In Base Case under IMF supervision this tightened monetary policy will continue in 2023 also. Though the analysts expect Consumer Price Index (CPI) inflation coming down to 14 per cent in FY24, but policy rate will remain around 15 per cent.