Rupee Stability Expected Next Week Starting July 8th

Rupee Stability Expected Next Week Starting July 8th

Karachi – July 7, 2024 – The Pakistani Rupee is expected to hold steady against the US dollar in the coming week, starting July 8th, 2024. This forecast comes after a week of relatively stable trading, with the rupee closing at approximately 278.50 per dollar in the interbank market.

However, analysts warn of a potential depreciation later in the year. Market experts at Tresmark predict the rupee could weaken to 295 per dollar by December 2024 and further decline to 325 by June 2025.

This week, the rupee exhibited narrow fluctuations, reflecting a balanced supply and demand for dollars. It closed at 278.37 on Tuesday and fluctuated slightly throughout the week before recovering to its starting position on Friday. The market remained closed on July 1st due to a national holiday.

“Pakistan faces economic headwinds in the near future, with concerns about inflation and declining demand,” Tresmark noted in a client report released Saturday.

To combat inflationary pressures, they anticipate the policy rate to remain between 17% and 19% by December 2024. Additionally, they project the rupee-dollar exchange rate to reach 295 by year-end and 325 by mid-2025.

Despite these challenges, there are some positive indicators. Exports rose by 10.54% in fiscal year 2024, while imports dipped by 0.84%. This resulted in a significant 12.32% reduction in the trade deficit, bringing it down to $24.01 billion.

A potential agreement with the International Monetary Fund (IMF) is also seen as a key factor for economic stability. Tresmark estimates this agreement could inject $6 billion to $8 billion into the Pakistani economy.

However, the report also cautions about potential drawbacks from tax measures outlined in the Finance Bill and rising fuel prices, which could further strain purchasing power and consumer demand.

In conclusion, while the Pakistani Rupee is expected to remain stable in the coming week, analysts predict a depreciation later in the year. Positive signs like a narrowing trade deficit offer some optimism, but economic challenges persist. The potential impact of the Finance Bill and fuel prices also warrants close monitoring.