Pakistan’s Policy Tightrope

Markets on Edge: Recession, Remittances & Rate Risk
In a charged webinar hosted by Tresmark and FMA, some sobering signals emerged. The tone? Cautious. The outlook? Fragile.
– 68% of participants are now pivoting towards commodities and precious metals — a classic hedge when fiat faith begins to erode.
– 46% expect global tensions to linger beyond a year, reinforcing the need for resilience over risk-on euphoria.
– And despite the headlines, 48% believe the BRICS currency won’t rival the USD within five years — a stark reality check.

One panelist warned that Trump’s tariff tantrums may do more damage than anticipated. Beyond just trade, the looming recession and inflation shock could dent remittances — a lifeline for Pakistan’s external accounts.

A separate poll by a US news outlet showed 58% of registered voters disapprove of Trump’s 100 day performance. That’s not just electoral smoke — it’s a signal of institutional stress.

Inflation: Tanking but Tethered
CPI has collapsed to 0.3% in April (vs. 0.7% in March and 17.3% last year). Core inflation has dipped to 7.4%. Textbook setup for a rate cut, right? Not quite!

A Tresmark poll shows 68% of traders expect no change in the upcoming MPC!!

Markets are rattled by trade risks, capital outflows, and a central bank that’s rightly cautious. Over $225mn has quietly exited from bonds and equities (April 2025). A cut could widen the exit door.

That said, the growth story is buried. Export-to-GDP keeps falling. FDI is limp. If there’s ever been a case for monetary stimulus, it’s now. Perhaps, the Central Bank may need to prioritise growth over caution

This MPC could be the trickiest one this year

Rupee: Guided Glide, Not Freefall
The SBP isn’t reaching for the exchange rate lever to drive competitiveness — and that’s a good thing. Instead, we’re seeing a controlled depreciation: of about 5–10 paisa per week. Expect this gradualism to continue.

Dollar’s Identity Crisis
The Dollar Index is down nearly 10% in 2025, its worst four-month start since 1973 — a year remembered for oil shocks, Watergate, and broken trust. Today? The echoes are deafening.

U.S. consumer data is unraveling:
– Bankruptcies and delinquencies are surging
– Real estate is wobbling
– Even McDonald’s and Starbucks are reporting domestic sales slumps.

If America’s middle class is skipping fries and frappes, the recession isn’t coming — it’s here.

Global systems are straining under the weight of policy missteps, populism, and protectionism. Global reserve managers are quietly rotating out of USD. Macro funds are shorting the dollar en masse. This isn’t volatility. This is an identity crisis.

India: The Outlier
While most emerging markets are ducking for cover, the Indian Rupee is holding up. Not because of intervention, but because of underlying conviction.

India is becoming America’s new offshoring hub, replacing China in Cold War 2.0 supply chains. Among BRICS, India stands alone — a high-growth, investor-friendly, pro-West outlier

Projections
USD/PKR
• 1 Week: 281.25
• 1 Month: 282.00
• 1 Quarter: 284.00
EUR/USD
• 1 Week: 1.1277 (Bearish)
• 1 Month: 1.1218 (Bearish)
• 1 Quarter: 1.1312 (Bearish)
GBP/USD
• 1 Week: 1.3237 (Bearish)
• 1 Month: 1.3132 (Bearish)
• 1 Quarter: 1.3225 (Bearish)
USD/JPY
• 1 Week: 144.87 (Bullish)
• 1 Month: 143.96 (Bullish)
• 1 Quarter: 142.2 (Sideways)
Oil WTI
• 1 Week: 59.33 (Bullish)
• 1 Month: 62.4 (Bullish)
• 1 Quarter: 64.33 (Bullish)
Gold
• 1 Week: 3240 (Bearish)
• 1 Month: 3061.25 (Bearish)
• 1 Quarter: 3100 (Bearish)