KARACHI: After making sharp gain a day earlier, the Pakistani Rupee (PKR) resumed its falling journey against the dollar on Friday and ended at PKR 284.65 in the interbank foreign exchange market.
The exchange rate recorded 23 paisas decline in the rupee value to end at PKR 284.65 to the dollar from previous day’s closing of PKR 284.42 in the interbank foreign exchange market.
A day earlier, the rupee rebounded to dollar and regained PKR 3.43 due to hopes of inflows from the International Monetary Fund (IMF).
READ MORE: Rupee rebounds significantly against dollar to end at PKR 284.42
The rupee fell to the record low at PKR 287.85 to the dollar on April 5, 2023.
The rupee was under immense pressure during the ongoing week due to uncertainty about the deal with the IMF for inflows of $1.2 billion under Extended Fund Facility (EFF).
However, the latest regain in rupee value may be attributed to positive news from friendly countries, which reportedly agreed to provide guarantee to Pakistan – a condition of the IMF.
A day earlier, the State Bank of Pakistan (SBP) announced that the country’s foreign exchange reserves fell by $55 million to $9.76 billion by the week ending on March 31, 2023. The latest reserves position has declined as compared to $9.815 billion a week earlier.
The country’s foreign exchange reserves have declined by $17.468 billion since reaching an unprecedented high of $27.228 billion on August 27, 2021.
READ MORE: Rupee hits fresh low at PKR 287.85 to dollar amid IMF inflow uncertainty
The official reserves of the State Bank of Pakistan fell by $36 million to $4.208 billion during the week ending on March 31, 2023, compared to $4.244 billion in the previous week.
Despite this decline, the State Bank of Pakistan’s foreign exchange reserves still exceed the level required to provide more than one month’s worth of import cover.
The recorded import bill for March 2023 was $3.828 billion, which ideally should be covered by foreign exchange reserves equivalent to three months’ worth of import payments. However, the central bank’s reserves have fallen below this level.
The decrease in the value of the PKR can be attributed to economic challenges, political uncertainties, and depleting foreign exchange reserves. Although the PKR had strengthened against the dollar due to a significant contraction in the current account deficit, a lack of inflows has put pressure on the currency.
READ MORE: Rupee crashes to historic low at PKR 287.29 against dollar
Official data showed that exports fell by 8.65% and workers’ remittances dropped by 11% during the first eight months (July-February) of 2022/2023.
Pakistan has been facing a foreign exchange crisis due to a decrease in foreign exchange reserves, a widening current account deficit, and delays in obtaining loans from international organizations such as the IMF.
The country’s efforts to reduce the current account deficit have been hampered by a decrease in exports and workers’ remittances. In an attempt to address the crisis, Pakistan has been seeking loans and financial assistance from international organizations such as the IMF.
READ MORE: Rupee ends near all-time low against dollar at PKR 285.04
However, delays in obtaining these loans have prolonged the crisis, and the country continues to face challenges in managing its foreign exchange reserves and stabilizing the value of its currency.