Karachi, July 31, 2023 – The Pakistani Rupee (PKR) experienced a depreciation against the US Dollar on Monday, ending at PKR 286.64 in the interbank foreign exchange market.
This decline amounted to 19 paisas from the previous closing rate of PKR 286.45 on July 27, 2023, according to the exchange rates released by the State Bank of Pakistan (SBP).
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Currency experts have attributed the depreciation of the local currency to multiple factors, with one significant factor being the market reopening after a three-day holiday. During the period of closure, there may have been pent-up demand for foreign currency, leading to increased pressure on the Pakistani Rupee upon the market’s resumption.
Furthermore, payment demands for imports and corporate transactions have reportedly remained high, contributing to the downward pressure on the local currency. The ease in the import policy introduced by the government has also amplified the demand for the US Dollar.
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A notable concern affecting the Pakistani Rupee’s value is the decline in foreign exchange reserves. The country’s foreign exchange reserves experienced a substantial reduction of $530 million for the week ending on July 21, 2023, as reported by the SBP on the evening of July 27. This has resulted in the total foreign exchange reserves standing at $13.534 billion, compared to $14.065 billion recorded a week earlier on July 14, 2023.
In response to this decline, Pakistan’s Finance Minister, Muhammad Ishaq Dar, made a statement a day earlier, pledging to boost the nation’s foreign exchange reserves to $15 billion within the next 7 weeks. This measure is likely aimed at stabilizing the currency and strengthening the country’s economic position.
As the Pakistani Rupee continues to face pressure against the US Dollar, the government and relevant authorities are closely monitoring the situation and may take further measures to mitigate the effects of the depreciation. The global economic landscape and factors influencing foreign exchange markets will also play a significant role in determining the future performance of the PKR against major currencies.
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The financial community and businesses in Pakistan will be keeping a close eye on developments in the foreign exchange market, as fluctuations in currency value can impact trade, investments, and overall economic stability. Investors and traders are advised to exercise caution and stay informed about the latest updates in the foreign exchange market to make well-informed decisions.
