Karachi, August 23, 2023 – The Pakistani Rupee (PKR) managed to stay above the 300-mark against the US dollar at the closing of the interbank foreign exchange market on Wednesday.
However, the exchange rate recorded a significant decline of 62 paisas, closing at PKR 299.63 to the dollar, compared to the previous day’s closing rate of PKR 299.01. This closing rate represents a fresh historic low for the rupee against the dollar.
READ MORE: Pakistani Rupee Hits Historic Low of PKR 299.01 to US Dollar at Interbank Closing
High Demand for US Dollar: A surge in demand for the US dollar, largely fueled by import requirements and corporate payments, has placed considerable pressure on the Pakistani Rupee. This increased demand has been a primary driver of the rupee’s depreciation.
Foreign Exchange Reserves Concerns: Concerns over Pakistan’s dwindling foreign exchange reserves and impending government repayments for foreign debt have further aggravated the rupee’s decline. Insufficient reserves have made it challenging to maintain the stability of the local currency.
SBP’s Policy Adjustment: A recent policy adjustment by the State Bank of Pakistan (SBP), allowing commercial banks to initiate import payments through letters of credit, has added to the strain on the already fragile rupee. This policy shift has accelerated the depreciation process.
READ MORE: Rupee Plunges to PKR 297.13 Against Dollar, Nears Historic Low in Interbank
Foreign Exchange Reserves: While there has been a slight improvement in Pakistan’s foreign exchange reserves, the figures remain far from robust. As of the week ending August 11, 2023, the State Bank of Pakistan reported foreign exchange reserves of $13.38 billion, representing a $40 million increase compared to the previous week’s reserves of $13.34 billion. However, this level is significantly lower than the peak of $27.2 billion observed in August 2021.
READ MORE: Rupee Dips Sharply Against Dollar, Hits PKR 295.78 Mark in Interbank Trading
The rapid depreciation of the Pakistani Rupee raises significant concerns about the country’s economic stability and its ability to manage its foreign exchange requirements. As the rupee hovers near the PKR 300 mark against the US dollar, it underscores the urgent need for comprehensive economic measures to address the root causes of this depreciation and to restore confidence in the local currency.
Stakeholders and financial authorities will closely monitor these developments and seek solutions to alleviate the pressures on the Pakistani Rupee while working to support the country’s financial stability.
READ MORE: Rupee Maintains Firmness Against Dollar, Closes at PKR 294.92
