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PKR to hit 350 per USD by 2024: Bloomberg
- Web Desk
- Nov 29, 2023
ISLAMABAD: The Pakistani rupee (PKR) is set to end the year as Asia’s worst-performing currency and the losses are expected to persist in 2024, with BMI Research expecting it to plunge to 350 per USD by the end of next year.
During the year, the currency has fallen by 20.73 percent or 59.21 rupees against the US Dollar, and analysts say its troubles are far from over, as Bloomberg reported.
“This looks like a currency that is set to adjust downwards,” said John Ashbourne, global economist at BMI in London, a Fitch Solutions company, citing Pakistan’s high inflation and trade deficit among the factors putting pressure on the rupee.
Pakistan’s high debt payments and an external funding gap are weighing on the rupee. The country was on the brink of default this year, and falling investments from overseas and Asia’s fastest inflation are adding to its woes, Bloomberg added.
The International Monetary Fund this month agreed to a $700 million payout, helping the nation stave off a default for now. Concerns remain its challenges may extend well into 2024, with the government requiring more aid for its fragile economy.
A dollar shortage may also lead to parallel currency markets that emerged last year after the central bank restricted access to foreign currency to preserve dwindling reserves.
As the rupee slumped to a record low in September, the government intensified a clampdown on illegal buying and selling of dollar at a premium to the exchange rate.
The sharp gains that followed appear short-lived.
“It’ll be very hard in the long term to convince people to use the official rate if parallel markets give more value for a dollar,” said Ashbourne. “The authorities can sort of push against the tide for a certain amount of time, but they aren’t able to do that sustainably.”
Goldman Sachs Group Inc. warned the market will continue to require a premium for the rupee given soaring interest costs and only short-term arrangements with lenders to support the external balance.