Fitch Solutions has predicted that the value of Pakistani Rupee will remain at an average of Rs163 against the US Dollar in 2020.
“The Pakistani Rupee has weakened by 7.1pc since January,” Fitch Ratings noted in a report issued on Wednesday.
The agency attributed this stability to the support extended by international partners, which helped Pakistan boost its reserves. It is evident from the fact that Pakistan’s foreign exchange reserves rose by 65pc to $12 billion in the fiscal year 2019-20, compared to $7.3 billion in the previous year. This rise in reserves will help Pakistan ease pressures from external financing.
Pakistan’s annual trade loss has also reduced by $8.6 billion. Imports fell to their lowest level in nine years after the country raised duties and adopted measures to curb spending. It reduced the current account deficit by more than 73pc in the first nine months of the year.
“However, the Pakistani rupee will be weakened to an average of Rs171.15 in 2021,” according to the Fitch analysis. “This is because the demand for Pakistani assets is low.”
Policymakers will likely allow for some rupee depreciation, given the lower oil prices. The oil price drop was a consequence of the coronavirus pandemic and an ongoing price war between top producers Saudi Arabia and Russia.