The US dollar climbed to a record high against the Pakistani Rupee (PKR), touching Rs175.73 in interbank trading on Friday. This unprecedented surge marks the rupee’s weakest performance, as escalating import payments continue to exert pressure on the local currency.
Currency experts noted a significant depreciation of the rupee by Rs1.54, ending the day at Rs175.73 against the previous day’s close of Rs174.19. This new record surpasses the previous all-time low of Rs175.27, recorded on October 26, 2021.
The rupee had experienced a temporary rally following its last record low in October 2021, buoyed by a financial pledge from Saudi Arabia. The Saudi government committed to transferring $3 billion directly to the State Bank of Pakistan (SBP) on the same day the last lowest rate was recorded. This support had offered a brief reprieve to the weakening currency.
However, the relief was short-lived as the demand for dollars continued to rise, primarily driven by a significant increase in import bills. Data from the Pakistan Bureau of Statistics (PBS) reveals that the import bill soared by 65.15 percent to $25.06 billion during the period from July to October 2021, compared to $15.17 billion during the same period in the previous fiscal year. This stark increase in imports reflects a growing economic challenge for Pakistan, fueling further demand for the US dollar.
The rising dollar has been a source of concern for Pakistan’s economy, which is grappling with multiple financial pressures including higher import costs and international debt obligations. These factors combine to stress the PKR, making imports more expensive and inflation harder to control.
Market analysts predict that if the trend of high import bills continues without corresponding increases in exports or external financial support, the PKR could face further devaluation. Economists suggest that Pakistan needs to enhance its export capabilities and seek more sustainable financial inflows to stabilize the currency.
As the government and financial authorities ponder over solutions to mitigate this economic challenge, the business community and consumers are bracing for potential impacts on pricing and cost of living due to the depreciating local currency.
The situation underscores the importance of comprehensive economic strategies that balance import needs with export growth, effective utilization of foreign aid, and stabilization measures by the central bank to ensure economic stability in the face of fluctuating global currency markets.
