Pakistani Rupee Extends Losses for Fourth Consecutive Session Against US Dollar

Pakistani Rupee Extends Losses for Fourth Consecutive Session Against US Dollar

Karachi, June 7, 2023: The Pakistani Rupee (PKR) has experienced a fourth consecutive session of losses against the US dollar, closing at PKR 286.88 in the interbank foreign exchange market on Wednesday.

During the trading session, the local currency depreciated by 32 paisas, ending at PKR 286.88 to the dollar compared to the previous day’s closing of PKR 286.56. Over the course of the past four sessions, the rupee has lost PKR 1.50 against the greenback.

READ MORE: Rupee Experiences Third Consecutive Loss Against Dollar; Interbank Ends PKR 286.56

Currency experts have identified several factors contributing to this depreciation. High import and corporate payments have exerted pressure on the rupee at the start of the week. Additionally, the dwindling foreign exchange reserves have played a significant role in the devaluation of the currency.

The central bank issued a statement indicating that Pakistan’s foreign exchange reserves decreased by $218 million, amounting to $9.513 billion by the week ending May 26, 2023. This decline follows the previous week’s reserves of $9.731 billion as of May 19, 2023. The continuous reduction in foreign exchange reserves is primarily due to the country’s ongoing external debt repayment obligations, highlighting the challenges Pakistan faces in maintaining a favorable balance of payments.

READ MORE: Pakistani Rupee Eases by 51 Paisas to Dollar in Interbank on June 5, 2023

It is noteworthy that Pakistan’s foreign exchange reserves reached an all-time high of $27.228 billion by the week ending August 27, 2023. However, since then, the country has experienced a significant decline, with reserves decreasing by $17.715 billion.

In recent weeks, the Pakistani Rupee has faced significant pressure due to limited inflows and a challenging political climate. On May 11, 2023, the rupee hit a record low of PKR 298.93 against the US dollar, raising concerns among investors and eroding confidence in the local currency.

Exchange rates are influenced by various factors, including supply and demand dynamics, market sentiment, and economic indicators. The recent devaluation of the Pakistani Rupee against the US dollar reflects the prevailing economic conditions and underscores the urgent need for measures to stabilize the currency.

READ MORE: PKR faces slight loss against dollar in interbank

As the country’s central bank, the State Bank of Pakistan plays a crucial role in managing the exchange rate and implementing policies to foster stability. To restore confidence in the Pakistani Rupee, the government must address economic challenges, attract foreign investment, and improve the overall economic outlook through prudent economic policies and structural reforms.

Market participants, policymakers, and financial experts will closely monitor exchange rate movements to assess their potential impact on various sectors of the economy. By analyzing these fluctuations and developing strategies, efforts will be made to mitigate factors that contribute to volatility in the foreign exchange market.

READ MORE: Pakistani Rupee Makes Nominal Gain Against US Dollar Amid Inflows

While short-term fluctuations are common, sustaining stability and achieving long-term growth require addressing underlying economic issues. The commitment of the Pakistani government to implementing prudent economic policies and structural reforms will play a vital role in restoring confidence and strengthening the Pakistani Rupee in the long run.

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