The Pakistani rupee has hit a historic low against the US dollar due to increased demand for the dollar following eased import restrictions and political uncertainty ahead of the general elections.
Pakistan's rupee dropped to a record low due to the easing of import restrictions, which has increased demand for the dollar.
The Indian rupee is expected to rise due to a pullback in U.S. Treasury yields and weak economic data, leading to a favorable near-term outlook.
Short-term inflation in Pakistan increased by 25.34% on a year-on-year basis due to a surge in prices of kitchen items, although it decelerated from the previous week's rate of increase.
The Pakistani rupee weakened further against the US dollar in the interbank market due to higher demand and uncertainty, while the open market remained stable; however, insiders noted that currency dealers were selling the dollar at higher rates in the open market.
The rupee's decline against the US dollar is being attributed to the powerful influence of the grey market and the International Monetary Fund's involvement in Pakistan's financial system, leading to a loss of control over the exchange rate and economic uncertainties.
Pakistan's external vulnerabilities are set to worsen due to shrinking dollar inflows and increasing debt servicing, putting pressure on foreign exchange reserves and potentially leading to their depletion.
The Oil and Gas Regulatory Authority (Ogra) is likely to recommend a hike in petroleum products prices in Pakistan due to an increase in global oil rates and depreciation of the rupee against the US dollar, with petrol expected to increase by Rs12 per litre and diesel by Rs14.83 per litre from September 1, 2023, leading to concerns of further inflation in the country.
The Pakistani rupee has fallen below 300 to a US dollar due to factors such as the rise of the dollar, uncertainty surrounding general elections, and a political/judicial/constitutional crisis, resulting in eroded business confidence, increased inflation, and reduced industrial output.
The caretaker government of Pakistan has increased petrol and diesel prices by over Rs14 due to the rising trend of petroleum prices in the international market and exchange rate variations.
The consistent devaluation of the Pakistani rupee is causing inflation and forcing the central bank to raise interest rates, leading to concerns about the economy and market confidence.
The recent increase in energy prices in Pakistan has led to protests over high inflation and electricity bills, with demonstrators burning utility bills, blocking highways, and attacking power company offices. The caretaker government has refused to lower energy prices without approval from the IMF, and has further increased petrol and diesel prices by over 14 Pakistani Rupees (PKR), surpassing PKR 300.
The relentless surge in pressure on the exchange rate and price level in Pakistan over the past two and a half years can be attributed to serious malfunctions on the balance of payments and fiscal accounts, which have thrown the monetary aggregates far from their projected path to stability. This has led to inflation and exchange rate pressure, and traditional IMF-mandated adjustments alone may not be enough to resolve the situation.
Pakistan's inflation rate remained above target in August at 27.4%, driven by reforms linked to an IMF loan that have fueled price pressures and declines in the rupee currency.
The recent bloodbath in the stock market and worsening economic conditions in Pakistan are attributed to electoral uncertainty, depreciating rupee, and concerns over inflation and interest rates.
The Pakistani rupee is expected to trade within a narrow range against the dollar in the upcoming week following its recent sharp depreciation, although some analysts anticipate continued pressure on the currency due to capital withdrawals, political unrest, and economic uncertainty.
The current economic crisis in Pakistan is driven by high inflation, mismanaged policies, and failure to ensure price stability, leading to a weakened currency and a struggling middle class, but implementing radical reforms such as demonetization and swapping out foreign currency debt can potentially alleviate the situation and revive the economy.
The high prices of electricity in Pakistan are a result of misgovernance in the power sector, including indirect taxes, losses in the system, expensive production, and the cost of generating electricity in new plants.
The U.S. is currently experiencing a prolonged high inflation cycle that is causing significant damage to the purchasing power of the currency, and the recent lower inflation rate is misleading as it ignores the accumulated harm; in order to combat this cycle, the Federal Reserve needs to raise interest rates higher than the inflation rate and reverse its bond purchases.
Millions of Pakistanis are facing the devastating consequences of an unprecedented economic crisis, with rising inflation, soaring fuel and electricity prices, and a weakening currency, leaving low-income households struggling to make ends meet.
Gold prices in Pakistan continued to decline for the fourth consecutive day, in line with international rates, as the domestic price of 24 karat gold fell by Rs5,800 per tola and Rs4,972 per 10 grammes to settle at Rs216,500 and Rs185,614 respectively, while the price of silver 24 karat dropped by Rs50 per tola and Rs42.87 per 10 grammes to settle at Rs2,650 and Rs2,271.94 respectively; meanwhile, the rupee gained Rs2.03 against the US dollar in the interbank trading, closing at Rs304.94.
The Indian rupee could reach record lows against the U.S. dollar if oil prices continue to rise, according to the head of global foreign exchange at Jefferies, Brad Bechtel, although he believes the rupee will be one of the more stable currencies in emerging markets. The rupee is currently moving between 83 and 85 against the U.S. dollar, and if oil prices were to fall, it could fall close to the 82 levels.
The Pakistani rupee's rise against the dollar is attributed to a crackdown on hoarding and illegal outflows of the greenback as well as increased vigilance in the Afghan transit trade.
Pakistan's central bank is expected to raise interest rates to address inflation and bolster foreign exchange reserves, following a series of rate hikes earlier this year in response to economic and political crises.
The Indian Rupee is weakening against the US dollar, causing concern for Indian authorities who fear that it could impact the country's import and export sectors, with suspicions that India may be taking measures to limit the dollar's growth; similarly, other BRICS member countries like China and Japan are also trying to curb the US dollar's growth.
The Pakistani military's crackdown on the black market has led to a significant influx of dollars into the interbank and open markets, resulting in the recovery of the Pakistan rupee and its strengthening beyond the official rate, with the campaign being credited to army chief General Asim Munir.
The Pakistani rupee has depreciated significantly in the first three weeks of the interim government's tenure, reaching a record low and making it the worst-performing Asian currency this quarter, due to factors such as a change in government and high inflation. The State Bank of Pakistan is implementing measures to address the economic challenges, including reforming the exchange rate and modernizing the banking system.
The short-term inflation in Pakistan increased by 26.25% due to a rise in the retail price of vegetables, particularly tomatoes and onions, caused by the closure of the Torkham border with Afghanistan.
The caretaker government of Pakistan has raised petrol and diesel prices to record levels, leading to a surge in inflation and impacting the prices of essential commodities, while the country continues to invest in and expand its nuclear weapons program.
The recent record-breaking increase in petrol prices in Karachi has had severe consequences for ordinary people, with many unable to afford fuel and resorting to alternative means of transportation, such as motorcycles or bicycles, while others contemplate selling their vehicles altogether.
The caretaker government in Pakistan has announced a historic hike in petrol and diesel prices, with fuel costing over ₹330 per litre, further burdening the public already facing high inflation.
The unprecedented increase in fuel prices in Pakistan is expected to cause a significant rise in inflation, with the Consumer Price Index projected to reach as high as 30% to 32% in September 2023.
The value of the Indian rupee is at risk of declining significantly due to surging oil prices and the dollar's rally, despite interventions by the Reserve Bank of India to prevent a fall.
Pakistan's exports saw a significant increase of 22.45% in the first two months of the fiscal year 2023-24, reaching Rs1.27 trillion, while imports decreased by 2.42%.
