Pakistan Rupee (PKR) depreciated to its lowest level since June 2019 in today’s early trading as the dollar price was quoted at 160.30/161 in the interbank market.
A.A.H Soomro, managing director at Khadim Ali Shah Bukhari Securities stated that this was bound to happen as State Bank of Pakistan signaled aggressive easing. Currency slippage is a global phenomenon. Indonesia, India, Malaysia all are witnessing losses against the greenback, he added.
Soomro further highlighted that falling energy prices would combat imported inflation. He noted that Pakistan’s central bank is prioritizing growth versus mild depreciation. He expects intervention near Rs. 165 (that would be the”disorderly” threshold).
According to different market experts, the recent plunge was seen due to the sharp rate cut and the significant stimulus package that was announced by the government of Pakistan, yesterday.
Stock markets have also plummeted amid fears of a global lockdown to contain the virus that has tipped the world economy into a recession from which it will take a year to recover.
While central bank rate cuts pushed yields on most major Asian bonds to historic lows earlier this month, over the past week traders have dumped sovereign debt for cash, driving a surge in the other direction.
As capital flees emerging markets, countries like Pakistan are absorbing the most potent economic shocks of the coronavirus outbreak.
This is also a threat to global fortunes. Emerging markets account for 60 percent of the world economy on the basis of purchasing power, according to the International Monetary Fund. A slowdown in developing countries is a slowdown for the planet.