Moody’s Investors Service, has forecasted that Pakistan’s rupee could shed value by another 7.75% and its worth may go as low as Rs125 to the dollar by June next year. Moody’s Investors Service, one of top three global credit rating agencies.
In its most recent report, Govt of Pakistan – B3 stable, annual credit investigation’, Moody’s has taken a negative perspective of Pakistan’s external sector but remained upbeat about economic growth prospects due to the China-Pakistan Economic Corridor (CPEC).
The credit ratings agency also does not see any “significant surprises” in terms of the broader direction of macroeconomic and national security policies after the 2018 general elections, indicating towards limited options available to political parties to change the landscape.
It has forecasted that as against Rs116 to a dollar esteem by June this year, the normal exchange rate could be Rs125 to a dollar by June 2019, suggesting a degrading of 7.75%. The nearby cash has stayed under strain as of late because of mounting outside area financing requirements. . The government has already devalued the currency by over 10% from December to March of this fiscal year.
Moody’s further said that a moderate but rising level of external government debt also exposes the country’s finances to sharp currency depreciation. The high level of imports, largely because of CPEC, continues to exert pressure on the external account, it added.
It said that there are also risks of higher than expected inflation, as oil prices have continued to rise, and there may be further rounds of currency depreciation by the SBP to reduce import demand.