It is expected that Pakistani Rupee will further depreciate by 5% against the dollar in 2018’s second half. It will be followed by further 5 to 7% devaluation in 2018/2019.
Alfalah Securities said, “We expect a further depreciation of around 5 percent in rupee/dollar value by the second half of 2018 followed by approximately 5 to 7 percent devaluation during 2018/19.We expect a further market-driven downward adjustment of the exchange rate in response to depletion of forex reserves, with the magnitude and duration of rupee weakness depending on when Pakistan signs up to an International Monetary Fund program or manages to arrange foreign exchange reserves bolstering hard currency from alternate sources.”
Since December 2017 Rupee value has gone down by 10% against the dollar.
Alfalah Securities added “The gross external financing requirement is on target to be around $25 billion for the full year,” it added. “The unfunded portion of the overall external gap is estimated to be around $12 billion for the current fiscal year, which could represent a drawdown of official reserves if it remains unfinanced.”
Adding, “ The depletion of foreign exchange reserves continued with the country’s international liquidity having declined a cumulative $7.1 billion in the past 12 months or by 38 percent. With large net external financing needs persisting over the next three years, the forex reserves loss is expected to continue, requiring an IMF (International Monetary Fund) loan arrangement (or an alternate financing source) by the summer.”
Jon Scheiber, CEO, and partner at Tundra Fonder also said last month that there are chances that Pakistani rupee will further depreciate.
The economic effects of Devaluation of Rupee against the dollar are huge from rise in fuel prices, to increase in vehicle prices to never-ending inflation. Thus it is important that Pakistani government and authorities find a solution to this issue. Economic stability is essential in the country for any kind of growth and development.