Economists have ruled out the possibility of a devaluation of the dollar during the current fiscal year, as well
He has also predicted that there is no scope for reduction in inflation.
By the way, the exchange rate looks stable, as the rupee is below Rs 280 against the US dollar, however, some analysts believe that the dollar may reach Rs 310 by the end of the current financial year. .
Faisal Mamsa, CEO of “Tracemark”, a financial terminal for real-time market rates, charts and financial data, says that the current fiscal year started at 286 against the dollar. Given historical trends, an annual depreciation of 7 to 10 percent is common, which supports exporters and keeps the real effective exchange rate (REER) close to parity. This means that the closing rates at the end of June will be around 310 per dollar.
Speaking to Do News on Saturday, he added, “The rupee is actually around two percent stronger today, and there is no chance of a major fall.”
However, most analysts and researchers believe that rampant inflation is now affecting the entire economy and all efforts are being made to deal with this uncontrollable enemy of the economy.
Inflation not only refuses to go away, but all other policies are now moving towards normalizing it.
This is a global problem with most economies prioritizing inflation over economic growth.
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It is also reflected in the government policies of Pakistan. Because by keeping the interest rate at 22 percent, economic growth has been compromised to fight inflation.
When the rupee depreciates, it increases the import inflation component.
To avoid this, a policy of strengthening the local currency has been adopted, an analyst said. This is part of the established “reverse currency wars” aimed at controlling inflation.
The general elections on February 8 have also added to the uncertainty in the current economic scenario.
Analysts say the new government is unlikely to make any major economic changes unless the inflation rate comes down significantly from 29.7 percent in December. As a result, the rupee is on the way to softening by the end of June this year.
Despite encouragement from the government, exporters have failed to improve their performance.
The government is trying to set a power tariff of nine cents per watt for industry, which will ultimately help exporters. However, approval from the IMF is required for this project.
Currency market expert and dealer SS Iqbal says, ‘This high cost of production has put a lot of pressure on the State Bank to cut interest rates, but the unexpected inflation will lead to an interest rate cut in the next monetary policy. The door is closed’.
He said the State Bank will announce monetary policy on Monday and most analysts say there will be no change in interest rates, especially due to high inflation.
However, the central bank believes that inflation will come down in the second half of the current financial year.