KARACHI, November 27, 2023 – The Pakistani Rupee (PKR) experienced a decline against the U.S. Dollar on Monday, concluding at PKR 285.64 in the interbank foreign exchange market.
This marks a decrease of PKR 0.27 from the previous Friday’s closing rate of PKR 285.37 against the dollar.
Market analysts attributed the decline in the exchange rate to the usual higher demand for the dollar on the first day of the week, particularly for import and corporate payments. They noted that the relaxation on import payments has led to a gradual increase in dollar demand.
Additionally, the depreciation of the rupee is linked to the decrease in foreign exchange reserves. The State Bank of Pakistan (SBP) reported a weekly decline of $217 million in its foreign exchange reserves, citing external debt payments as a contributing factor. As of the week ending November 17, 2023, the official reserves of the SBP stand at $7.18 billion, reflecting a significant drop from the $7.397 billion reported just a week earlier on November 10, 2023.
This decline in reserves is part of an ongoing trend, with the country’s total foreign exchange reserves witnessing a decrease of $234 million. The total reserves settled at $12.302 billion by the week ending November 10, 2023, compared to the preceding week’s level of $12.536 billion.
Currency experts emphasized that the determination of market-based exchange rates is also a factor impacting the value of the rupee. The fluctuations in market dynamics, along with external factors such as debt payments and import demands, contribute to the volatility observed in the exchange rate.
The weakening of the rupee against the dollar is a matter of concern for both policymakers and the business community. It reflects the delicate balance required in managing the country’s external economic factors, including trade and debt obligations. The State Bank of Pakistan’s efforts to maintain stability in the foreign exchange market will likely continue to be closely monitored as the situation unfolds.
As the global economic landscape evolves, the resilience and adaptability of Pakistan’s currency will remain key considerations for stakeholders. The central bank’s proactive measures and the overall economic policies will play a vital role in navigating the challenges posed by the external economic environment.
