The US dollar reached an unprecedented high of Rs176.50 during intraday trading at the interbank foreign exchange market on Friday, signaling a further decline in the value of the Pakistani Rupee (PKR).
The PKR lost Rs1.52 against the dollar compared to the previous day’s closing rate of Rs174.98.
This new record surpasses the previous historic high of Rs175.75, which was recorded at the interbank foreign exchange market closing on November 12, 2021. The continuous depreciation of the Pakistani Rupee against the US dollar is raising concerns among economic experts and market participants.
Currency experts attribute the rupee’s significant depreciation to a substantial decline in the country’s foreign exchange reserves. The State Bank of Pakistan (SBP) revealed that Pakistan’s foreign exchange reserves experienced a reduction of $776 million within a week, primarily due to external debt repayment.
As of the week ending November 19, 2021, the country’s foreign exchange reserves stood at $22.774 billion, down from $23.55 billion a week ago. The reserves held by the SBP decreased by $691 million, reaching $16.254 billion, compared to $16.945 billion the previous week. The central bank attributed this decline to external debt repayment.
Commercial banks also witnessed a decrease in their foreign exchange reserves, with a drop of $85 million to $6.52 billion, compared to $6.605 billion a week ago.
The continuous decline in foreign exchange reserves has become a point of concern for the Pakistani economy, as it not only impacts the value of the rupee but also raises questions about the country’s ability to meet its external obligations. The State Bank’s efforts to manage and stabilize the currency are being closely scrutinized by analysts.
The situation underscores the importance of prudent economic management, fiscal discipline, and the implementation of policies to enhance foreign exchange inflows. The government will likely face increasing pressure to take corrective measures to address the economic challenges and stabilize the foreign exchange market.
As the country grapples with economic uncertainties, it becomes crucial for policymakers to consider strategies that attract foreign investments, boost exports, and ensure sustainable economic growth. The US dollar’s historic surge against the Pakistani Rupee emphasizes the need for a comprehensive and well-coordinated approach to address the root causes of the economic challenges facing Pakistan.
