While the exchange rate stumbled more than expected (3.6% since May-12), continued volatility can be expected until clarity emerges on foreign flows, in our view.
In this backdrop, we highlight that global growth slowdown looks imminent but flag the recent cut in Arab light price forecast by our commodity team as a key positive.
We cut our FY13E oil import estimate by ~US$1bn to US$15.4bn (now only +1% YoY), adjusting for downward revision in average oil price (-5% YoY) forecast by BofAML.
Incorporating adjustments and current trends, we expect PkR to depreciate by 5.7% in FY13E based on current account expanding to US$4.5bn in FY13E.
However we believe (1) adequate reserves to repay loan to IMF in FY13E and (2) potential relief in the form of CSF flows should ease off near-term sentiments and hence the currency, before resuming its mid-term devaluation path, in our view.
(KASB)
No comments:
Post a Comment