October 26, 2023 (MLN): The performance of the best-performing currency the Pakistani rupee (PKR) will be short-lived in the backdrop of financing risks and the upcoming elections, according to Goldman Sachs's analyst.
"The recent appreciation of the Pakistani rupee will likely be short-lived, given soaring interest costs and only short-term arrangements with the IMF and bilateral financing to support the external balance," analysts led by Kamakshya Trivedi wrote in a Wednesday report.
"The market will continue to require a premium for Pakistan's rupee ahead of elections," he added.
Last week, the local unit ended its 28-day historic streak of an upward trajectory against the USD, losing 1.18 rupees against the greenback.
The decline was attributed to the low liquidity of US Dollars within banks, due to which they were quoting forward rates.
The local unit experienced remarkable gains driven by the army-backed crackdown to restrict illegal dollar outflows, along with other administrative measures implemented by the government.
Moreover, the reforms introduced by the State Bank of Pakistan (SBP) to consolidate and transform various types of exchange companies into a single category with a well-defined mandate and higher capital requirements are also improving transparency.
At the time of writing, the dollar is being traded at PKR 280.20 in the interbank market, witnessing an up of 32 paisa compared to the previous close.
