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Thursday, May 30, 2024  
21 Dhul-Qadah 1445  

Pakistani rupee to appreciate to Rs230 against US dollar: Report

Real interest rate becomes positive first time in three years

The value of the Pakistan rupee against the US dollar could appreciate in the next few month to Rs230, a report has claimed.

The report by ProPakistani cited an anonoymous former State Bank official to say that real interest rates have moved into positive territory for the first time in three years and the development could influence the exchange rate over the next year.

The US dollar could drop by as much as Rs55, which amounts to almost 20% of its current value.

The greenback is currently trading for around Rs278 in the interbank market.

Real interest rate become negative when the interest you receive from bank is lower than the rate of inflation in the country. Hence, those saving money suffer.

Since inflation is falling, the interest rates could fall further, decreasing the pressure on rupee even more as Pakistan’s interest payments will fall.

A report by Goldman Sachs in March this year had made a similar prediction for the rupee.

Goldman Sachs had said that the rupee was “nearly 20% undervalued on a 12-month horizon and offers about 26% nominal carry”.

“We think the intersection of undervaluation, carry and the latest continued but slow disinflation motivates our constructive view on the PKR,” the report had said.

However, the report had added that macro economic issues will be influenced by political stability in the country.

The report had also said that external financing risks will be controlled as Pakistan heads towards an extended progam with the International Monetary Fund.

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