Turkish lira’s recent drop will boost the US dollar adversely affecting the Pakistani Rupee in return. The dollar hit another 13-month high against a basket of major currencies on August 15.Īnalysts contend that the safe-haven demand for US dollar rooted in fears over fallout from the Since April 2018, the dollar index has strengthened by 7.6 per cent due to rising US interest rates that has seen a flight of capital from the emerging markets. Turkish companies that have borrowed dollars from European banks to fuel growth are finding it harder to repay the loans as lira loses value.Īccording to experts, the European banks may become overstretched under the threat of non-performing loans, and this has a potential to cause a full-blown financial crisis. ![]() On August 13, the Turkish currency stood at 6.95 liras for one US dollar after falling 1.39 liras since August 9, igniting fears that the effects of its fall may be felt in other emerging markets as well. These measures and a potential IMF deal, might allow Pakistan to avoid a crisis, says Charlie Robertson Global Chief Economist, Renaissance Capital. Luckily, Pakistan’s central bank has been allowed to respond appropriately with interest rate hikes and allowing the currency to weaken. It would need to fall another 30 to 40 per cent to be as cheap as the Turkish lira. The Turkish lira is now the cheapest currency in EMs, but the Pakistani Rupee is only fair value. “Pakistan’s current account deficit is among the highest in emerging markets (EM) countries, and the currency is sliding. ![]() LAHORE: With a steep fall in the value of Turkish lira in the last two weeks, experts contend that it’s after effects may impact the Pakistani economy in the shape of a possible currency devaluation.
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