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MENAFN- Daily Forex)
- During my daily analysis of exotic currency pairs, the USD/PKR pair has captured my attention due to the fact that it is so obviously sideways.
- At this juncture, somewhere around the 277.5 level, it's obvious that the central banks are involved, and this keeps this pair very tight.
- In fact, most traders that are involved in this pair are doing it through futures markets, and they are doing it to edge potential currency risks.
The most common participant in this pair would be large manufacturers of textiles. Pakistan has a huge textile industry, so it does make a certain amount of sense that there is significant hedging going on. That being said, keep in mind that the central bank in Pakistan has its thumbs on the scales, so there's only so much of this pair can do at any given moment. For example, over the last year or so, we have seen the market bounce around between the 277 level and the 280 level.
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If you have the ability to trade this pair, you can scalp the sideways action, but you also have to keep on top of what's going on in Pakistan, because although the US dollar has been extraordinarily strong against most currencies, due to the fact that this is such a heavily manipulated currency pair. That being said, if the central bank in Pakistan allows this pair to free-floating little bit, I think we will go looking toward the 279.50 level before it is all said and done. Unfortunately, that could take several weeks or months. On a break down below the 277 level, then it opens up a move to the downside, with a target of wherever it is the central bank of Pakistan wants to push this market.
As things stand right now, if you can find decent opportunities inside the spread, it's possible that you could play some trades here and there, but right now, it looks like we are just simply hanging around at what is likely the bottom of the overall range of the year.
Ready to trade our daily Forex forecast ? Here's a list of some of the top brokers & trading apps in Pakistan to check out.
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