The US Dollar made slight gains against the Pakistani Rupee (PKR) in the interbank foreign exchange market on Thursday, closing at PKR 220.95. The rupee lost seven paisas compared to the previous day’s closing of PKR 220.88, reflecting the prevailing pressure on the local currency.
Currency experts attributed the depreciation of the rupee to increased demand for the dollar, particularly for import payments, coupled with a decline in foreign exchange reserves. The rupee’s performance was influenced by ongoing economic challenges and fluctuations in global financial markets.
The US Dollar rebounded after a prolonged losing streak against the rupee, which had lasted for thirteen consecutive sessions. The exchange rate had reached near-record lows of PKR 239.71 on September 22, 2022, before recovering to PKR 217.79 on October 10, 2022. Despite this recovery, concerns persist regarding the stability of the rupee amidst fluctuating economic conditions.
Pakistan’s foreign exchange reserves witnessed a decline, decreasing by $342 million to $13.247 billion by the week ending October 07, 2022. This decline was noted from the previous week’s reserves of $13.589 billion, indicating ongoing challenges in managing the country’s external finances.
The foreign exchange reserves had reached an all-time high of $27.228 billion on August 27, 2021. However, since then, reserves have declined by $13.981 billion, underscoring the need for effective measures to stabilize the currency and strengthen economic resilience.
Finance Minister Dar recently stated that the actual value of the dollar is below PKR 200 and pledged to bring it down. However, achieving stability in the currency market requires comprehensive strategies to address underlying economic imbalances and restore investor confidence.
Despite recent gains made by the rupee, experts caution that sustained efforts are needed to mitigate currency volatility and promote economic stability. The central bank has implemented various measures to curb dollar hoarding and encourage the repatriation of foreign exchange, but challenges persist in maintaining a balanced exchange rate regime.
As Pakistan navigates through economic uncertainties, policymakers face the daunting task of striking a balance between managing external pressures and fostering sustainable growth. Enhancing export competitiveness, attracting foreign investment, and strengthening fiscal discipline are crucial steps in achieving long-term stability in the currency market and ensuring economic prosperity for the nation.