- May 10, 2025
- Posted by: Tresmark
- Categories:
Pak-India cross-border strikes have spiked regional tensions, rattling markets. However, the dollar-Rupee dynamic has remained reasonably stable despite the noise. The PSX, though volatile all week, has closed nearly 6,000 points lower.
Dollar Creeps Up, Exporters Hold Back
The dollar has been inching up by 10–15 paisas daily for the past few days. This steady rise has made exporters cautious, leading to a pause in export proceeds and a slowdown in new orders. However, banks report ample dollar liquidity, and if calm returns, flows may resume in the next two weeks.
SBP Moves to Plug Outflows
To safeguard reserves, SBP has stepped up monitoring of imports and placed restrictions on precious metal trading and will understandably move towards curbing non essentials. Now, it’s also expected to keep a close watch on imports and proceeds to prevent unnecessary pressure on the Rupee. Reserves have already improved this week. There will be material requirement for defense related imports.
Yesterday, the IMF approved the immediate disbursement of about $1 billion to Pakistan under the ongoing Extended Fund Facility (EFF) and allowed an additional arrangement for the $1.4bn Resilience and Sustainability Facility (RSF). This signals continued support from the lender and gives the government breathing space to manage external pressures.
Rate Cuts Still in Sight
With inflation subdued and no downgrade threat from rating agencies, analysts expect another 100 bps rate cut this year, likely in two 50 bps steps. The Fed has also kept its own rates unchanged, which gives SBP some breathing room. If regional tensions don’t flare up further, the policy rate could settle at 10% by year-end.
IMF Sees Recovery Ahead
The IMF’s latest projections offer cautious optimism:
GDP growth of 2.6% in FY25 and 3.6% in FY26
Fiscal deficit narrowing from 5.7% to 5.1% of GDP over the same period
With the current account likely in surplus and IMF support in place, liquidity doesn’t seem to be an immediate concern.
Projections :
USD/PKR
• 1 Week: 282
• 1 Month: 283
• 1 Quarter: 285
EUR/USD
• 1 Week: 1.1212 (Bearish)
• 1 Month: 1.1213 (Bearish)
• 1 Quarter: 1.1324 (Sideways)
GBP/USD
• 1 Week: 1.3234 (Bearish)
• 1 Month: 1.3176 (Bearish)
• 1 Quarter: 1.3260 (Sideways)
USD/JPY
• 1 Week: 145.10 (Sideways)
• 1 Month: 143.96 (Sideways)
• 1 Quarter: 141.75 (Bearsih)
Oil WTI
• 1 Week: 60.88 (Bullish)
• 1 Month: 63.67 (Bullish)
• 1 Quarter: 65.43 (Bullish)
Gold
• 1 Week: 3293.33 (Bearish)
• 1 Month: 3131 (Bearish)
• 1 Quarter: 3165 (Bearish)