PKR/USD🧵
Since hitting its peak of 276.6 the PKR has appreciated 4.6% against the USD.
Interestingly the REER as measured by JP MORGAN is near its all time lows of 83.2 against the 3 year average of 98.
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#PakistanEconomicCrisis #PakistanEconomy #KSE100
Since hitting its peak of 276.6 the PKR has appreciated 4.6% against the USD.
Interestingly the REER as measured by JP MORGAN is near its all time lows of 83.2 against the 3 year average of 98.
1/4
#PakistanEconomicCrisis #PakistanEconomy #KSE100
Fundamentally the PKR seems undervalued which shows how acute the current liquidity crisis is with FX reserves exhausted at USD 3.0 billion.
The long term REER range indicates sharp reactions at 110 (depreciation) and 90 (appreciation).
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The long term REER range indicates sharp reactions at 110 (depreciation) and 90 (appreciation).
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Inflation differentials with our trading partners (US - 6.4% & China - 2.1%) will see a rapid rise in the REER if the nominal rate stabilizes here.
Ball park if you assume REER stability at 95, 🇵🇰 CPI to average 25%, then you should target a parity of ~280 by year end.
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Ball park if you assume REER stability at 95, 🇵🇰 CPI to average 25%, then you should target a parity of ~280 by year end.
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Question is will we have enough USD flows to see a recovery in the PKR?
When does the Fed stop hiking & will the USD wrecking ball swing back into action?
“Markets can stay irrational longer than you can stay solvent." (as my stock market friends can testify)
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When does the Fed stop hiking & will the USD wrecking ball swing back into action?
“Markets can stay irrational longer than you can stay solvent." (as my stock market friends can testify)
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