Appreciating JPY to bring more troubles for Pakistan’s auto sector
 

KARACHI: Pakistan’s auto sector, already facing many challenges, is about to confront another negative event in the wake of JPY appreciation against USD, as this would directly impact margins of the auto assemblers including Pak Suzuki Motor Company (PSMC), Honda Cars (HCAR) and Indus Motor Company (IMC).

Post indication of several global surveys of a potential economic slowdown mainly in Europe and China, JPY has strengthened by 2.0 percent against USD and 14 percent against PKR in the fiscal year so far, since investors sought exposure in safe haven ‘JPY’.

An analyst at BIPL Securities said higher input cost owing to adverse movement in currencies and lower ability to pass on the impact would keep the margins of the auto assemblers under pressure. Additionally, restriction on the purchase of vehicle by non – filers, rising borrowing costs, decelerating GDP growth rate and rising cost of vehicles would inhibit the demand for autos in 2019, CustomnewsPK reported