Depreciating Pakistani rupee a risk

21/05/2017 08:02 AST

A depreciating Pakistani rupee may negate the attractive stock market returns, therefore posing danger to dollar based funds.

The rupee has depreciated 3 per cent since 2016. “For investors that want to actively counter the risk of a depreciating rupee, the option is to focus on export sectors. In those cases, depreciation would be a supportive development,” Mathieu Nègre from UBP said.

UBP said with forex reserves falling, the risk of depreciating rupee will be on the top of investors mind.

“We expect that the Pakistan central bank will continue to act to keep the rupee relatively stable/calming volatility and will continue to spend FX reserves to do so,” Negre said. Although FX reserves have dropped in the last couple of months, they are still at $22 billion above the average of the last three years of $19 billion.

“This means the ability of the central bank to support the rupee is not compromised significantly yet,” Negre said.


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