Article by Currency Information and Research

Future Outlook of the Pakistani Currency (PKR)

The forecasts of the International Monetary Fund - IMF - are not very encouraging for the Pakistani rupee. According to the reference service worldwide when it comes to economy. They said the currency depreciate further in coming years, about 13% to a rate of Rs113.7 rupees per $ 1.

Although the methods that were applied to arrive at that rate and projection have not been explained in the last report on the economic activities of Pakistan, the IMF states that the rupee is very "overvalued".

The problem is even more serious when you consider that what says lead economist Dr. Ashfaque Hasan Khan, Economic Advisory Council (EAC). According to him, if the forecast Rs113,7 rupees per dollar is not confirmed, all negotiations, imports and exports which are based on that projection would fall to the ground and generate losses and economic mess.

It needs to be said that during the last fiscal year (2013 - 2014), the IMF had stated that the Pakistani rupee was already overvalued and worked with a value of about Rs114 for each $ 1. Such warning overvaluation caused the State Bank of Pakistan (SBP) and the Ministry of Finance of the country could bring down the cost of dollar to around Rs98 rupees. The average exchange rate during the last fiscal year remained at Rs102.8 rupees to $ 1.

According to experts, with a sharp depreciation of the rupee, product prices as oil and services such as electricity will trigger, since a few years ago the Pakistani government can not meet the country's needs - even with the high in rates.

According to analysts, even the currency take a turn and become one rupee getting stronger and help the government to get on its export target for the period, about 27 billion dollars, will not help at all with inflation.

So that the economy has not collapsed, the government enlisted the help of Saudi Arabia who injected a subsidy of $ 1.5 billion. Other assistance factor was also the emission of more than $ 2 billion in Eurobonds, an issued value of title nominally and in US dollars which are sold to foreign investors outside the country that negotiates. All this money was enough for Pakistan found himself relieved of the pressure of the foreign exchange market came to believe more in the country and fear less and less an international cap.

The report also mentions that one of the main challenges of the Pakistani economy going forward will be the strengthening of its foreign exchange reserves. Just by way of illustration, in this period the reserves fell slightly, remaining at about 14.5 billion dollars.

The IMF now suggests that Pakistan's Central Bank to adopt a more flexible exchange rate, which will help achieve the targets of reserve funding at the same time would help boost exports and also reach this other goal.

Currently, the rupee is trading at Rs103.90 to $ 1, while it is expected by the end of fiscal year 2014-15 has depreciated to reach the Rs113.7 for $ 1 as provided by the agency.


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