In recent weeks, the US dollar (USD) has been experiencing a significant decline against the Pakistani rupee (PKR), marking a notable shift in currency dynamics.
This downward trajectory gained momentum after Pakistan secured a crucial $3 billion infusion from the International Monetary Fund (IMF), earmarked to bolster the nation’s economic stabilization program.
This downtrend in the USD/PKR pair persists, with the greenback recently hitting a one-month low against the resilient rupee.
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At the time of publication on September 21, $1 was worth 289.55 rupees, the lowest since mid-August.
Why is the USD declining against PKR?
The recent USD’s weakness against the Pakistani rupee represents a continuation of a market trend that took place in August.
Pakistan’s government has initiated a clampdown on USD hoarding and smuggling activities. The Federal Investigation Agency (FIA) and other intelligence services were tipped to carry out raids at homes to put an end to US dollar hoarding.
“There are reliable reports that the dollar mafia has hoarded the greenback at homes after the crackdown.”
– reports said.
In the wake of the clampdown, the US dollar significant ground to PKR in the open market.
The anti-hoarding campaign also exposed numerous bank staff members who conspired with the perpetrators to store large amounts of US dollars, which were then used for illicit activities such as money laundering.
According to Malik Bostan, Chairman of the Exchange Companies Association of Pakistan (ECAP), PKR’s uptrend against the USD could continue if the authorities keep cracking down on dollar smugglers.
“In the near future, it is expected that the PKR may reach 250 against the greenback.”
– Bostan predicted.
USD/PKR technical analysis
Meanwhile, the bearish sentiment of the USD against the PKR is also reflected in TradingView’s technical analysis of the currency pair.
Notably, the 1-day gauges are advocating a ‘Sell’ for USD/PKR, with a substantial consensus of 10 indicators favoring the ‘Sell’ stance, while only 7 indicators advise a ‘Buy,’ and 8 remain ‘neutral,’ underscoring the prevailing pessimism towards the greenback’s performance against the Pakistani rupee.
The most bearish indicator is moving averages (MAs), with as many as 8 ‘Sell’ recommendations, compared to 1 ‘Neutral’ and 5 ‘Buy.’
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