Karachi, August 15, 2023 – The Pakistani Rupee (PKR) faced a significant setback on Tuesday as it tumbled to PKR 291.51 against the US Dollar on the inaugural day of the new interim government’s tenure.
This abrupt decline saw the rupee lose a staggering PKR 3.02 against the dollar compared to its closing rate of PKR 288.49 on August 11, 2023, in the interbank foreign exchange market.
The timing of this plunge is noteworthy, as it coincides with the recent swearing-in of the interim prime minister, marking the commencement of a term that will conclude with the general elections. Currency analysts highlighted that the rupee’s weakened performance was partly attributed to the extended holidays, which resulted in a heightened demand for the dollar.
It is worth recalling that the rupee had previously hit an all-time low of PKR 298.93 on May 11, 2023. The situation has been exacerbated by the recent decision by the State Bank of Pakistan (SBP) to permit commercial banks to initiate import payments through the opening of letters of credit. This policy shift has further strained the rupee’s standing, contributing to its rapid depreciation.
Another crucial factor in the rupee’s decline has been the dwindling foreign exchange reserves of the nation. As of August 4, 2023, Pakistan’s foreign exchange reserves stand at $13.34 billion, marking a decline of $125 million compared to the preceding week’s figure of $13.464 billion as of July 27, 2023. This decreasing trend raises concerns about the country’s capacity to manage imports and uphold the rupee’s stability on the global currency stage.
In light of these developments, financial experts are cautioning market participants, investors, and traders to exercise prudence and stay well-informed regarding foreign exchange rates. The prevailing volatility underscores the potential far-reaching consequences on trade, investments, and the overall economic climate.
Both local and international stakeholders are closely monitoring the government’s efforts to strengthen reserves, as well as the impact of global economic dynamics on the Pakistani rupee’s performance in the days ahead. The stability of the rupee remains an essential factor with wide-ranging implications for the nation’s economic outlook.