KARACHI: The Fitch Ratings on Thursday said it had revised down its forecasts for the Pakistani rupee for both this year and the next due to a variety of factors including an increased flow of US dollars into neighbouring Afghanistan.

For 2022, Fitch now expects an average rate of Rs180 versus a previous forecast of Rs165. Fitch’s forecast for the rupee’s average rate this year (2021) is now Rs164 to the US dollar compared with Rs158 previously.

The Pakistan currency has lost about 11.5 per cent since May 2021.

Based on Pakistan’s worsening terms of trade, tighter US monetary policy, alongside the flow of the greenback out of Pakistan and into Afghanistan, the Fitch Ratings expects the rupee to weaken further.

Over the long term, tightening US monetary policy alongside higher structural inflation relative to the United States would weaken the rupee against the dollar, Fitch said.

The US dollar kept rising in both the inter-bank and open markets on Thursday. The greenback gained 18 paisa to close at Rs170.66. It traded as high as Rs173.50 in the open market.

Published in Dawn, October 1st, 2021