Karachi, April 18, 2024 – The US Dollar continued its upward trajectory against the Pakistani Rupee (PKR) on Thursday, marking the fourth consecutive day of gains in the interbank foreign exchange market.
The dollar closed at PKR 278.44, recording a slight increase of PKR 0.04 compared to the previous day’s closing rate of PKR 278.40.
Currency experts attribute the persistent depreciation of the rupee to various factors, including heightened import payments and corporate demand, particularly in the aftermath of the recent Eid-ul-Fitr holidays. Since April 9, 2024, when the rupee closed at PKR 277.94 against the dollar, the local currency has experienced a consistent downward trend, reflecting ongoing challenges in the foreign exchange market.
Recent developments, such as the State Bank of Pakistan’s (SBP) payment of $1 billion against international bonds, have intensified pressure on the exchange market. This substantial payment has strained foreign exchange reserves, prompting increased demand for the dollar. Analysts anticipate a notable decline in the SBP’s foreign exchange reserves in the coming weeks following the reconciliation of the latest foreign payment, further exacerbating concerns about the stability of the nation’s currency.
While Pakistan’s foreign exchange reserves recorded a marginal increase of $62 million to $13.44 billion by the week ending April 5, 2024, apprehensions persist regarding the resilience of the currency. The central bank’s reserves remained relatively stable at $8.04 billion during the same period, indicating concerted efforts to manage liquidity and stabilize the currency amidst mounting challenges.
The fluctuations in the exchange rate have profound implications for various sectors of the economy. Importers face heightened costs as the rupee depreciates, leading to increased prices of imported goods and raw materials. Conversely, exporters may benefit from a weaker rupee as it enhances the competitiveness of their products in international markets.
Investors are closely monitoring the situation, assessing the impact of currency fluctuations on their portfolios and investment strategies. The volatility in the exchange market underscores the importance of robust risk management and diversification for investors, particularly those with exposure to foreign currencies and assets.
Government officials and policymakers are expected to closely monitor exchange rate dynamics and implement measures to stabilize the currency and bolster foreign exchange reserves. Efforts to attract foreign investment, boost exports, and enhance economic resilience will be crucial in mitigating the challenges posed by exchange rate volatility and external pressures.
As the exchange rate remains vulnerable to various internal and external factors, market participants are advised to remain vigilant and adapt to changing conditions. While challenges persist, proactive measures and prudent economic policies can help navigate uncertainties and foster long-term stability in the currency market.
