Karachi, August 22, 2023 – The US dollar has strengthened its position against the Pakistani Rupee, surging to PKR 297.74 during midday interbank trading today.
This marks a notable increase of 61 paisas compared to yesterday’s closing rate of PKR 297.13 in the interbank foreign exchange market.
READ MORE: Rupee Plunges to PKR 297.13 Against Dollar, Nears Historic Low in Interbank
Financial experts point to several factors contributing to this decline. An upswing in the demand for the US Dollar for import purposes and corporate payments has placed substantial pressure on the local currency. Furthermore, concerns regarding dwindling foreign exchange reserves and impending government repayments for foreign debt have exacerbated the rupee’s devaluation.
READ MORE: Rupee Dips Sharply Against Dollar, Hits PKR 295.78 Mark in Interbank Trading
The situation is causing concern as the rupee’s value approaches its historical low of PKR 298.93, recorded on May 11, 2023. A significant contributor to this precarious situation is a recent policy adjustment by the State Bank of Pakistan (SBP), which allows commercial banks to initiate import payments through letters of credit. This policy shift has strained the already vulnerable rupee, hastening its decline.
READ MORE: Rupee Maintains Firmness Against Dollar, Closes at PKR 294.92
Moreover, the limited foreign exchange reserves have contributed to the US Dollar’s ascent. The latest data from the State Bank of Pakistan indicates a slight improvement in the country’s foreign exchange reserves, reaching $13.38 billion by the week ending August 11, 2023. This represents an increase of $40 million compared to the previous week’s reserves of $13.34 billion. However, it remains significantly lower than the peak of $27.2 billion observed in August 2021.
READ MORE: Pakistani Rupee Nears Record Low, Plunges to PKR 294.93 Against US Dollar
Financial experts are advising caution among various stakeholders, including market participants, investors, and traders. The escalating volatility in the exchange rate raises alarms about potential far-reaching implications for trade, investments, and the overall economic landscape.
As the situation continues to evolve, close attention will be necessary to assess the direction of the rupee and its impact on the broader financial health of the nation. Authorities are expected to closely monitor and take measures to stabilize the currency and restore confidence in Pakistan’s economic stability.
