Karachi, August 31, 2023 – The Pakistani Rupee (PKR) reached a fresh low at PKR 305.54 against the US Dollar on Thursday in interbank foreign exchange market, marking its relentless descent over a ten-day period.
This persistent depreciation, which commenced on August 17 at PKR 294.92 in the interbank foreign exchange market, has sparked significant concerns among financial experts and policymakers alike.
READ MORE: Rupee Freefall Continues: Hits New Record Low at PKR 304.45 Against the Dollar
Analysts attribute this continuous slide of the local currency to the surging demand for the US dollar for imports and corporate payments, leading to an imbalance in the foreign exchange market.
Financial experts point to Pakistan’s dwindling foreign exchange reserves as a key factor driving this relentless decline. The State Bank of Pakistan (SBP) recently reported a substantial reduction in these reserves, intensifying worries about the nation’s economic outlook.
READ MORE: Rupee Depreciation Continues for 8th Straight Day; Hits New Low at PKR 303.05 to Dollar
According to the latest data released by the SBP, foreign exchange reserves plummeted by $131 million during the week ending August 18, 2023. This decline saw reserves drop from $13.379 billion on August 11, 2023, to just $13.248 billion by August 18, 2023. This significant decrease stands in stark contrast to the situation observed in August 2021 when Pakistan boasted a robust reserve of $27.2 billion.
The substantial depletion of foreign exchange reserves has underscored the ongoing economic challenges facing Pakistan, raising serious concerns about the nation’s capacity to maintain a stable economic foundation. The rapid depreciation of the rupee, combined with dwindling foreign exchange reserves, has triggered uncertainty in financial markets and heightened fears of inflation.
READ MORE: Dollar Touches New Peak at PKR 302 Against Rupee in Interbank Closing on August 28
As pressure mounts, the government and financial authorities are now tasked with implementing effective measures to stabilize the rupee and bolster foreign exchange reserves. Economists are advocating for a comprehensive approach, including efforts to boost exports, attract foreign investment, and control imports, addressing the root causes of the rupee’s continuous decline.
READ MORE: Pakistani Rupee Hits All-Time Low at PKR 301 to Dollar in Interbank Market Closing
With the Pakistani Rupee continuing its downward trajectory, policymakers face the daunting challenge of restoring confidence in the local currency and steering the economy toward sustainable growth. The upcoming weeks will be pivotal in assessing the effectiveness of these measures in halting the rupee’s decline and safeguarding Pakistan’s economic stability. Observers worldwide will closely monitor these developments as Pakistan strives to navigate its current economic challenges.
