Karachi, August 22, 2023 – The Pakistani Rupee (PKR) has hit a historic low, closing at PKR 299.01 against the US dollar in the interbank foreign exchange market on Tuesday.
This marks a significant decline from the previous low of PKR 298.93 recorded on May 11, 2023. The exchange rate saw a notable drop of PKR 1.88 compared to the previous day’s closing rate of PKR 297.13 in the interbank foreign exchange market.
READ MORE: Rupee Plunges to PKR 297.13 Against Dollar, Nears Historic Low in Interbank
Financial experts have identified several factors contributing to this alarming depreciation of the Pakistani Rupee. Foremost among these is a surge in demand for the US Dollar, driven by import requirements and corporate payments. This elevated demand has placed considerable pressure on the local currency.
Additionally, concerns over dwindling foreign exchange reserves and impending government repayments for foreign debt have further exacerbated the rupee’s decline.
READ MORE: Rupee Dips Sharply Against Dollar, Hits PKR 295.78 Mark in Interbank Trading
One pivotal factor in this precarious situation is a recent policy adjustment by the State Bank of Pakistan (SBP). This policy allows commercial banks to initiate import payments through letters of credit, placing additional strain on the already fragile rupee and hastening its depreciation.
Furthermore, the limited foreign exchange reserves have contributed to the ascent of the US Dollar. The latest data from the State Bank of Pakistan reveals a modest improvement in the country’s foreign exchange reserves, which reached $13.38 billion by the week ending August 11, 2023. While this represents a $40 million increase compared to the previous week’s reserves of $13.34 billion, it remains significantly lower than the peak of $27.2 billion observed in August 2021.
READ MORE: Rupee Maintains Firmness Against Dollar, Closes at PKR 294.92
Financial experts are urging caution among various stakeholders, including market participants, investors, and traders. The escalating volatility in the exchange rate raises concerns about potential far-reaching implications for trade, investments, and the overall economic landscape.
As the situation continues to evolve, close attention will be necessary to assess the direction of the rupee and its impact on the broader financial health of the nation. Authorities are expected to closely monitor and take measures to stabilize the currency and restore confidence in Pakistan’s economic stability.
READ MORE: Pakistani Rupee Nears Record Low, Plunges to PKR 294.93 Against US Dollar
The challenge of stabilizing the exchange rate is a complex one, and concerted efforts from both public and private sectors will be essential to mitigate the current economic uncertainty.
