The Pakistani rupee faces a test of stability following political unrest sparked by disputed elections. The local currency remained relatively unchanged in the interbank market, closing at 279.36 per dollar on Monday. The political uncertainty has led analysts to refrain from making predictions about financial market rates. Despite this, it is expected that the rupee will remain stable for the next two weeks, possibly aided by remittances due to Ramadan.
The ongoing political crisis has led to allegations of electoral rigging and protests by various parties, casting a shadow of uncertainty over the country’s economic stability. Moody’s has issued a “credit negative” signal to Pakistan, and the IMF’s willingness to continue or initiate new programs is in question. The situation has also led to a lack of willingness among financial institutions to take new or longer-term positions in the interbank forex markets. As the country braces for continued uncertainty, it is anticipated that the impact of IMF negotiations and inflows from bilateral and multilateral partners will be felt after March, and the political chaos may intensify during this period. These factors are contributing to a sense of uncertainty and apprehension in the currency market.
