Experts believe Pakistani rupee’s current strength unlikely to last

WEB DESK: Goldman Sachs Group Inc. is expressing concern about the recent rise in the value of the Pakistani rupee, suggesting that this increase might not last long.

Although the Pakistani currency has performed impressively on the global stage over the past two months, Goldman Sachs has doubts about its ability to sustain these gains. This skepticism is rooted in Pakistan’s financial vulnerabilities.

Just a while ago, the rupee hit a record low, trading at 307 rupees to one US dollar. However, it has since rebounded by more than 8 per cent, with one US dollar now equal to 280 rupees.

This increase in PKR’s value is the most significant among all world currencies in the past month. The primary reason behind this boost is the Pakistani government’s efforts to crack down on illegal dollar trading.

Still, according to a report led by Goldman analysts, including Kamakshya Trivedi, this boost in the Pakistani rupee’s value is not expected to last long.

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Their reasoning is based on Pakistan’s increasing interest costs and its reliance on short-term financial agreements with the International Monetary Fund (IMF) and other countries to maintain its financial stability.

Investors are concerned about the political uncertainty in Pakistan, especially with upcoming elections and the possibility of a change in government. As a result, they are stockpiling Pakistani rupees in the hope that they will become more valuable in the future.

This growing demand for Pakistani rupees is causing its value to rise compared to other currencies. This means that it will take more Pakistani rupees to buy items and services priced in foreign currencies.

The report is warning that this trend is likely to continue leading up to the elections, which means people should be prepared for higher prices.