Karachi, September 7, 2023 – In a surprising turn of events, the Pakistani Rupee (PKR) demonstrated a remarkable recovery against the US dollar today, closing at PKR 304.94 in the interbank foreign exchange market. This recovery represents a significant gain of PKR 2.04 in rupee value compared to the previous day’s closing rate of PKR 306.98.
Currency experts attribute this sharp turnaround to the recent reforms introduced by the State Bank of Pakistan (SBP) in the exchange companies sector. Just a day before, the central bank initiated a series of structural reforms aimed at enhancing the monitoring and governance of exchange companies operating within the country.
READ MORE: PKR Recovers Against US Dollar in Volatile Interbank Trading
The move by the SBP comes in response to persistent regulatory issues and weaknesses observed in the exchange companies sector, particularly among Exchange Companies of ‘B’ Category (ECs-B) and franchises of Exchange Companies. These issues had hindered the attainment of desired levels of governance quality, internal controls, and compliance with laws and regulations, necessitating the need for significant reforms within the sector.
The PKR had been on a continuous decline against the US dollar and reached an all-time low of PKR 307.10 to the dollar on September 5, 2023. A surge in imports had elevated the demand for foreign currencies, contributing to the rupee’s depreciation. Concerns regarding Pakistan’s ability to meet its foreign obligations had led to a loss of investor confidence.
READ MORE: Rupee Hits Fresh Low at PKR 307.10 to Dollar in Fathomless Journey
The depreciation of the rupee had also resulted in ripple effects on domestic prices, particularly concerning fuel prices. The caretaker government had previously announced significant increases in petroleum prices due to currency volatility, placing additional financial strain on citizens.
Furthermore, Pakistan’s foreign exchange reserves had been steadily declining, with the State Bank of Pakistan (SBP) reporting a significant drop of $77 million in just one week, as of August 31, 2023. This depletion had raised concerns about the country’s ability to manage its external financial obligations.
READ MORE: Rupee Freefall Continues: Hits New Record Low at PKR 304.45 Against the Dollar
According to the SBP, Pakistan’s foreign exchange reserves had decreased to $13.171 billion during the week ending August 25, 2023, down from $13.248 billion in the previous week (August 18, 2023). These economic challenges, including rapid rupee depreciation and dwindling foreign exchange reserves, had created uncertainty in financial markets and heightened concerns about inflation.
READ MORE: Pakistani Rupee Hits New Low at PKR 305.54 Against the Dollar in Persistent Slide
The sudden recovery of the Pakistani Rupee brings a glimmer of hope to the country’s economic landscape, although challenges persist in stabilizing the currency and addressing broader economic issues. The success of the recent reforms in the exchange companies sector remains a key factor in sustaining this positive trend.
