Rupee devaluation not on the table: Prime Minister

According to a local daily, Prime Minister Shahid Khaqan Abbasi said in an interview with Bloomberg late Saturday that he will not opt to devalue the rupee to spur inflows.

The statement comes amidst stoking speculation that the prime minister will opt to devalue the rupee as twin deficits are depleting the nation’s foreign-exchange reserves and constraining credit ratings.

“So at this moment as I said devaluation is not on the table,” he added.

Pakistan’s current account gap more than doubled to $12.1 billion in the year ended June, while its trade deficit surged to a record $33 billion as imports increased.

USD – A Bearish case for the dollar

In 2014 and 2015, the USD appeared to be boosted by the notion of rising rates. However, the move was only considered by the Central Bank of USA.

The dimension have tilted somewhat, with more than a few central banks considering hikes the major impression is that major banks across the world are not in the favor of policy accommodation.

Apart from that, the Fed is currently in progress of unwinding its balance sheet, prompting a rate hike in future.

This means it is less likely to raise rates over the period ahead. The Fed has been trying to say QT can happen in the background and may not affect its rates policy. But it is a form of tightening, and naturally, will make the Fed more cautious about future rate hikes.