CA balance incorporated: PKR kept artificially undervalued at 282.2 vs $1: Tola

LAHORE: The value of the rupee (PKR) is 249.2/USD after incorporating the Current Account balance of the Jul-April period of FY25, said Tola Associates in its latest economic outlook.

The report has pointed out that the PKR value has been kept artificially undervalued at PKR 282.2/USD as the present value of PKR is 249.9/USD.

Tola Associates have also drawn a graph depicting four scenarios: (a) First scenario provides PKR valuation as of June 30, 2024; (b) Second scenario illustrates the valuation of PKR valuation based on the actual CAD, ie, $665 million in FY24; (c) The third scenario provides PKR value based on the government’s CAD projection of 0.9% of GDP; (d) and the last scenario is calculating the PKR value based on the adjusted CA projection of the government adjusted for the Jul-April FY25).

Fitch forecasts Pakistan rupee at 285 against US dollar by June, 295 by FY26 end

It further said that a 10-rupee depreciation results in a 2% increase in inflation, and vice versa. In the inter-bank market, the value of the national currency stands at PKR 282.2/USD as of 29th May 2025. Over the past week, the USD to PKR parity rate has shown a slight declining trend, whereby the PKR has devalued.

It said the export-led growth has three vectors including the agricultural sector, the manufacturing sector and the IT industry. Along with this, public financial management has an important role to play which involves expenditure control and revenue enhancement.

Pakistan’s economic outlook reflects cautious optimism as inflation experienced a remarkable decline, dropping to 0.3% in Apri12025. Over the past year, inflation fell dramatically from 29.7% in November 2023 to 11.2% by May 2024 and reached just 0.7% in March 2025, a record drop within a single year.

However, the inflation outlook remains vulnerable to several risks, including additional fiscal measures to address revenue shortfalls, a potential resurgence in food inflation, and rising global commodity prices. Despite these challenges and the anticipated phasing out of the favorable base effect, the Monetary Policy Committee assessed that the current monetary policy stance is appropriate for stabilizing inflation within the target range.

Copyright Business Recorder, 2025