ISLAMABAD, March 29 (Xinhua) -- The State Bank of Pakistan (SBP) will announce an increase of its key discount rate for the next two months on Friday.
Stock market experts told Xinhua on Thursday that the Pakistani central bank is likely to add 25-50 basis points in its key interest rate for the months of April and May.
Syed Faran Rizvi, Head of Equity Sales at JS Global Capital Limited, stated that the recent depreciation in the value of Pakistani rupees against the U.S. dollar is the main driving force behind any anticipation of a rate hike by the country's central bank.
Pakistan has recently witnessed two waves of depreciation in its currency against the greenback. The first wave was witnessed on Dec. 8, 2017, which slid the Pakistani rupee by 4.9 percent against the American currency.
The Pakistani currency took another nosedive on March 20 and declined by around 4 percent. During four months, Pakistani rupee is down 9 percent against U.S. dollar after remaining stable for almost 28 months. During the last 10 years, Pakistani rupee has devalued annually by 5 percent against the greenback.
The currency experts are expecting further devaluation in Pakistani rupee of at least 10-15 percent during the fiscal year of 2018-19 and fiscal year of 2019-20, on top of the devaluation of 9 percent in the fiscal year of 2017-18 thus far, taking the USD/PKR parity to around 140 rupees by June 2020.
The State Bank of Pakistan, in its previous monetary policy statement on Jan. 2018, increased the key discount rate by 25 basis points to 6 percent.
The latest increase in the value of the greenback against Pakistani rupee has sparked fears of a rise in inflation in the South Asian country in the coming weeks. The previous rate hike was made to get hold of the economic challenges after the central bank kept its rate unchanged for 20 months.