The Pakistani rupee (PKR) is expected to continue its downward spiral and reach a historic low of 350 per dollar by the end of 2024, according to a report by BMI Research, a Fitch Solutions company.
The report, which was cited by Bloomberg, a global financial news provider, says that the PKR will be the worst-performing currency in Asia this year, and will face further depreciation in the next three years. The report attributes the PKR’s weakness to Pakistan’s high inflation, trade deficit, debt payments, external funding gap, and falling foreign investments.
The report also cautions that Pakistan may face a dollar shortage that could lead to the emergence of parallel currency markets, where the dollar is traded at a higher rate than the official exchange rate. This would undermine the credibility of the central bank and the government, which have been trying to curb illegal currency trading and stabilize the rupee.
The report adds that Pakistan’s economic challenges may persist well into 2024, as the country relies on short-term loans and aid from the International Monetary Fund and other lenders to avoid a default. The report suggests that the market will demand a higher risk premium for the PKR, given the rising interest costs and the uncertain external balance.
The report said that the PKR is set to adjust downwards, and that the authorities will not be able to resist the market pressure sustainably. The report implies that a weaker rupee will have negative implications for Pakistan’s economic growth, stability, and social welfare.