Karachi, September 1, 2023 – The Pakistani Rupee (PKR) has finally broken its 10-day losing streak against the US dollar, showing signs of recovery by gaining 7 paisas in the closing of the interbank foreign exchange market.
The foreign exchange market witnessed this notable recovery, with the rupee’s value improving to PKR 305.47 against the dollar, compared to the record low of PKR 305.54 in the interbank foreign exchange market. This positive shift comes after a persistent depreciation trend that began on August 17 when the PKR was valued at PKR 294.92.
READ MORE: Pakistani Rupee Hits New Low at PKR 305.54 Against the Dollar in Persistent Slide
Market analysts have attributed this recovery to an early-day announcement by the State Bank of Pakistan (SBP), stating that there would be no unscheduled monetary policy committee (MPC) meeting. The SBP has confirmed that the discount rate review meeting will proceed as scheduled on September 14, 2023.
However, it’s worth noting that while the rupee’s depreciation had a negative impact on the exchange rate, it had adverse consequences for petroleum prices. The caretaker government had previously announced a significant increase in petroleum prices due to the volatility in the exchange rate.
READ MORE: Rupee Freefall Continues: Hits New Record Low at PKR 304.45 Against the Dollar
On a more concerning note, the fluctuating exchange rate has raised questions about Pakistan’s ability to meet its foreign obligations, given the steady decline in foreign exchange reserves. As reported by the central bank on August 31, Pakistan’s foreign exchange reserves dwindled by $77 million in just one week.
The SBP revealed that the country’s foreign exchange reserves dropped to $13.171 billion during the week ending August 25, 2023, down from $13.248 billion in the previous week (August 18, 2023). This significant depletion of foreign exchange reserves underscores the ongoing economic challenges confronting Pakistan.
READ MORE: Rupee Depreciation Continues for 8th Straight Day; Hits New Low at PKR 303.05 to Dollar
The rapid depreciation of the rupee, coupled with diminishing foreign exchange reserves, has generated uncertainty in financial markets and heightened concerns about inflation. Addressing these challenges will be critical to stabilizing Pakistan’s economic foundation and ensuring sustainable growth in the coming months.
