Rupee\u2019s weakness \u2018still has further to run\u2019: Fitch Solutions
\nFitch Solutions on Tuesday predicted that the rupee\u2019s weakness still has \u201cfurther to run\u201d, which will have broader economic implications for the country \u2014 already gripped by a major economic crisis, with the rupee plummeting, inflation soaring and energy in short supply.<\/p>\n
The New York-based research agency, in its quick view, noted that the rupee\u2019s devaluation was triggered by the decision among local foreign exchange companies to remove the self-imposed cap on the exchange rate on January 25.
\nThe State Bank of Pakistan (SBP) initially intervened, but the significant depreciation in the rupee \u201cis a clear sign the authorities have effectively loosened their grip on the currency.\u201d<\/p>\n
Fitch Solutions mentioned that their current forecast for the rupee to reach Rs248 per dollar by year-end \u201cis therefore now looking out of date\u201d.<\/p>\n
Following massive depreciation of 14.36% (or Rs38.74) in the last three days (Thursday-Monday), compared to Wednesday\u2019s close at Rs230.89, the rupee\u2019s steep fall hit brakes as it was changing hands with the greenback at Rs268.20 in the interbank market (as of 11:04am).<\/p>\n
\u201cWe believe that the rupee\u2019s weakness still has further to run particularly with Pakistan\u2019s balance of payments positions likely to remain weak for several more months,\u201d it noted.<\/p>\n
The agency said that there remains a \u201cconsiderate amount of uncertainty at this juncture\u201d therefore it is difficult to gauge the extent to which the latest devaluation has caused investor sentiment to soar further.<\/p>\n
\u201cWe will therefore firm up our rupee forecasts over the coming weeks, once the dust settles,\u201d the quick view mentioned.<\/p>\n
In its analysis, Fitch warned that a continued weakening in the rupee will have broader economic implications too in the near term, \u201cit could exacerbate imported inflationary pressure and may eventually result in steeper policy rate hikes from the SBP.\u201d<\/p>\n
The report added that Fitch expects Pakistan\u2019s economy to contract by 0.3% in the fiscal year 2022-23.<\/p>\n
Fitch, however, mentioned that the rupee\u2019s devaluation will help Islamabad secure further disbursements from the International Monetary Fund (IMF), which would be a positive for the longer-term outlook as it would help ease Pakistan\u2019s balance of payments strains.<\/p>\n
The world’s fifth-biggest population has less than $3.7 billion as reserves in the State Bank \u2014 enough to cover just three weeks of imports.<\/p>\n","protected":false},"excerpt":{"rendered":"
Rupee\u2019s weakness \u2018still has further to run\u2019: Fitch Solutions Fitch Solutions on Tuesday predicted that the rupee\u2019s weakness still has \u201cfurther to run\u201d, which will have broader economic implications for the country \u2014 already gripped by a major economic crisis, with the rupee plummeting, inflation soaring and energy in short supply. The New York-based research […]<\/p>\n","protected":false},"author":1,"featured_media":112779,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[54,23],"tags":[],"class_list":["post-112778","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-islamabad","category-national"],"_links":{"self":[{"href":"https:\/\/tns.world\/index.php?rest_route=\/wp\/v2\/posts\/112778","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/tns.world\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/tns.world\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/tns.world\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/tns.world\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=112778"}],"version-history":[{"count":1,"href":"https:\/\/tns.world\/index.php?rest_route=\/wp\/v2\/posts\/112778\/revisions"}],"predecessor-version":[{"id":112780,"href":"https:\/\/tns.world\/index.php?rest_route=\/wp\/v2\/posts\/112778\/revisions\/112780"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/tns.world\/index.php?rest_route=\/wp\/v2\/media\/112779"}],"wp:attachment":[{"href":"https:\/\/tns.world\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=112778"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/tns.world\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=112778"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/tns.world\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=112778"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}