Goldman Sachs predicts short-lived surge for Pakistani Rupee against Dollar. In a recent report, Goldman Sachs Group Inc. has indicated that the remarkable appreciation of the Pakistani rupee against the US dollar is unlikely to be sustained due to existing financing gaps.
The Pakistani currency had experienced a significant boost, emerging as the world’s best-performing currency in September.
This surge was a consequence of the Pakistani authorities’ crackdown on hoarders and illegal currency traders.
However, analysts at Goldman Sachs, led by Kamakshya Trivedi, have pointed out that the current strengthening of the rupee is expected to be short-lived.
The reasons cited for this anticipated decline include the burden of high interest costs, reliance on short-term arrangements with the International Monetary Fund (IMF), and bilateral financing that falls short in supporting the nation’s external balance.
The report further noted that the market is likely to demand a premium for Pakistan’s rupee in light of upcoming elections, indicating a period of volatility.
Despite the recent surge, concerns loom over the nation’s dependence on foreign aid from Middle Eastern countries and China for sustaining dollar inflows.
The International Monetary Fund is scheduled to assess Pakistan’s economic performance in the coming week, a crucial step ahead of a loan disbursement as part of its $3 billion bailout program.
Analysts foresee the Pakistani rupee trading within a narrow range of 275-285 per dollar until the subsequent tranche of the IMF’s loan program is finalized.
As Goldman Sachs predicts short-lived surge for Pakistani Rupee against Dollar, recent fluctuations in the rupee’s value have been attributed to heightened demand for dollars from importers, while exporters have slowed down their dollar sales, anticipating a stabilization of the rupee at its current levels in the near future.
Investors and market observers are closely monitoring these developments amid ongoing economic shifts in the region.
