Karachi, July 26, 2023 – The Pakistani Rupee (PKR) broke an 8-day losing streak against the dollar on Wednesday, experiencing a recovery of PKR 1.48, thanks to Chinese finance assistance.
The interbank foreign exchange market witnessed the rupee’s value rise from PKR 288.52 to PKR 287.04.
Currency experts attribute the rebound of the local currency to the deferment of Chinese debt and commitments made by Chinese banks. This financial aid comes at a crucial time, considering the recent volatility in the currency exchange rate, partially triggered by the International Monetary Fund’s (IMF) approval of a $3 billion Stand By Agreement (SBA) for Pakistan. The country has already received the first tranche of $1.2 billion from the IMF, contributing to an impressive surge in foreign exchange reserves, currently standing at $14.07 billion.
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Despite the growth in foreign exchange reserves, the foreign exchange market has shown skepticism, and the rupee faced a significant devaluation in the past eight sessions, beginning on July 14. Financial experts speculate that this decline may be influenced by the IMF’s insistence on adopting a more flexible exchange rate regime, resulting in increased fluctuations in the currency’s value.
Another contributing factor to the surge in the dollar’s demand is the rise in import payments, which has added further pressure on the exchange rate, exacerbating the rupee’s depreciation.
READ MORE: Pakistani Rupee Continues Downward Spiral Against Dollar, Hits 6-Day Losing Streak
While economic authorities in Pakistan are closely monitoring the situation and planning necessary steps to stabilize the currency and promote economic growth, the duration of the rupee’s losing streak remains uncertain. The government’s response and actions to address the underlying economic factors affecting the currency’s value will be crucial in navigating through this period of financial turbulence.
READ MORE: PKR Continues to Slide Against USD, Closes at PKR 285.15 in Interbank
As the nation grapples with these challenges, market participants and citizens are keeping a close eye on the currency’s performance and the government’s measures to make informed financial decisions. The situation calls for careful monitoring and proactive measures to mitigate the impact on the country’s economy and ensure stability in the foreign exchange market.
