Karachi, September 5, 2023 – The US dollar reached an all-time high of PKR 306.25 during intraday trading at the interbank market on Tuesday, marking a significant depreciation in the value of the Pakistani rupee.
READ MORE: Rupee Freefall Continues: Hits New Record Low at PKR 304.45 Against the Dollar
The foreign exchange market witnessed a decline of 61 paisas in the rupee’s value during intraday trading, pushing it to PKR 306.21 to the dollar from the previous day’s closing rate of PKR 305.64. This sharp depreciation is attributed to various factors, including growing demand for import payments and uncertainty in the country’s external payment situation.
Currency analysts point to the rising demand for import payments as a key driver behind the rupee’s depreciation. The uncertain external payment situation, combined with increased import activity, has put pressure on the exchange rate.
READ MORE: Pakistani Rupee Hits New Low at PKR 305.54 Against the Dollar in Persistent Slide
The depreciation of the rupee has had adverse effects on domestic prices, particularly in the context of fuel prices. The caretaker government had previously announced a significant increase in petroleum prices due to the currency’s volatility, which has further strained the finances of the average citizen.
In addition to its impact on domestic prices, the fluctuating exchange rate has raised concerns about Pakistan’s ability to meet its foreign obligations. The country’s foreign exchange reserves have been on a consistent decline, with the State Bank of Pakistan (SBP) reporting a drop of $77 million in just one week as of August 31, 2023.
READ MORE: Pakistani Rupee Ends 10-Day Losing Streak Against US Dollar, Settles at PKR 305.47
According to the SBP, Pakistan’s foreign exchange reserves decreased to $13.171 billion during the week ending August 25, 2023, down from $13.248 billion in the previous week (August 18, 2023). This substantial depletion of foreign exchange reserves underscores the ongoing economic challenges facing Pakistan.
The rapid depreciation of the rupee, coupled with diminishing foreign exchange reserves, has created uncertainty in financial markets and heightened concerns about inflation. Addressing these challenges will be of utmost importance for stabilizing Pakistan’s economic foundation and ensuring sustainable growth in the coming months. Government measures and monetary policies will play a crucial role in addressing these economic issues and restoring confidence in the financial markets.
READ MORE; Pakistani Rupee Eases Against US Dollar, Reaches New Historic Low at PKR 305.64
