Pakistani Rupee Continues Downward Spiral, Closes at PKR 288.14 Against US Dollar

Pakistani Rupee Continues Downward Spiral, Closes at PKR 288.14 Against US Dollar

Karachi, November 15, 2023 – The Pakistani Rupee (PKR) sustained its downward trajectory for the 17th consecutive session against the US dollar, closing at PKR 288.14 in the interbank foreign exchange market on Wednesday.

This represents a continual decline of PKR 9.35 or 3.53 percent since October 20, 2023, when it stood at PKR 278.79.

On a day-to-day basis, the local currency slipped by 27 paisas compared to the previous day’s closing of PKR 287.87 in the interbank foreign exchange market.

The persistent depreciation of the rupee is attributed to mounting pressure, largely fueled by the ongoing International Monetary Fund (IMF) review of Pakistan’s bailout package. Commencing on November 2, 2023, this assessment is expected to conclude by December 15, 2023.

The outcome of the review holds significant importance, as it will determine Pakistan’s eligibility for the second tranche of $700 million, scheduled for disbursement in December. The first installment of $1.2 billion was released in July as part of the standby arrangement.

Market analysts point to the decline in export proceeds as a primary factor contributing to the rupee’s plight. This has prompted the central bank to actively engage in dollar purchases, strategically aimed at shoring up foreign reserves and meeting the stringent conditions set by the IMF. The scrutiny of Pakistan’s economic performance by the international financial body adds an additional layer of complexity to the situation, as the country strives to fulfill outlined conditions for sustained financial support.

The central bank’s proactive approach to accumulating dollars is viewed as an effort to build a safety net against economic uncertainties. This aligns with the broader goal of fulfilling the IMF’s prerequisites for the release of funds. Actively bolstering reserves, the central bank aims to maintain stability and navigate the economic challenges posed by the dynamic global economic landscape.

As Pakistan grapples with economic headwinds, the government and financial institutions face increased pressure to implement policies addressing the root causes of the rupee’s depreciation. The nation’s ability to navigate these challenges will not only determine its eligibility for the upcoming IMF tranche but will also play a crucial role in shaping the economic trajectory in the coming months.

Market participants and policymakers will keenly observe developments to gauge the effectiveness of measures taken to stabilize the currency and foster economic resilience in the face of global uncertainties.

The 17th consecutive dip of the Pakistani Rupee against the US dollar underscores the urgency for robust economic policies and effective measures to stabilize the currency, ensuring Pakistan’s eligibility for crucial financial support and bolstering economic resilience in an unpredictable global landscape.

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