Pakistan's Rupee Predicted to Continue Struggling in 2024

According to Yahoo News, the Pakistani rupee is expected to finish the year as Asia's worst-performing currency, with losses predicted to extend into 2024. The currency has fallen approximately 20% against the dollar this year, and analysts believe its troubles are far from over. BMI predicts the currency will fall to 350 rupees by the end of next year, while Karachi-based brokerage Topline Securities Ltd. sees it dropping to 324 rupees. It closed at 285.64 rupees on Monday. Pakistan's high inflation, trade deficit, high debt payments, and an external funding gap are all factors putting pressure on the rupee. The country was on the brink of default this year, and falling investments from overseas and Asia's fastest inflation are adding to its woes. Remittances also remain muted, making Pakistan more dependent on foreign aid for dollar flows. The International Monetary Fund (IMF) agreed to a $700 million payout this month, helping the nation stave off a default for now. However, concerns remain that its challenges may extend well into 2024, with the government requiring more aid for its fragile economy. A dollar shortage may also lead to parallel currency markets that emerged last year after the central bank restricted access to foreign currency to preserve dwindling reserves. As the rupee slumped to a record low in September, the government intensified a clampdown on illegal buying and selling of dollars at a premium to the exchange rate. The gains that followed appear short-lived. Goldman Sachs Group Inc. warned the market will continue to require a premium for the rupee given soaring interest costs and only short-term arrangements with lenders to support the external balance. As Pakistan heads for national polls in February, Topline Securities expects the new government to sign a long-term program with the IMF next year, which could provide relief to the currency.