Karachi, November 10, 2023 – The Pakistani Rupee (PKR) continued its downward trend for the 14th consecutive session against the US dollar, closing at PKR 287.03 on Friday.
The local currency experienced a notable decline of PKR 8.24 or 2.95 percent in the latest losing streak that began on October 20, 2023.
On a day-to-day basis, the rupee saw a decrease of 13 paisas compared to the previous session, closing at PKR 286.90 against the dollar on November 8, 2023, in the interbank foreign exchange market.
A significant factor contributing to the persistent devaluation of the rupee is the decline in Pakistan’s foreign exchange reserves. According to a report from the State Bank of Pakistan (SBP), the country’s reserves dropped by $78 million in just one week, ending at $12.577 billion by the week concluding on October 27, 2023. This marks a substantial decrease from the previous week’s figure of $12.655 billion, as observed on October 20, 2023. This decline stands in stark contrast to the robust foreign exchange reserves of $27.2 billion recorded in August 2021.
Another influential factor in the rupee’s depreciation is the escalating demand for imports. The recent economic recovery and increased import activities have exerted significant pressure on the rupee. The expanding business landscape and economic rebound have heightened the need for foreign currency to finance imports, resulting in increased demand for the US dollar.
The continuous devaluation of the Pakistani Rupee against the US Dollar underscores the urgent need for strategic oversight to stabilize the currency. A weaker currency can have far-reaching consequences, impacting import costs, inflation rates, and the overall economic well-being of the nation. For businesses engaged in international trade, fluctuations in exchange rates can significantly affect profitability and global competitiveness.
A critical concern that demands attention is Pakistan’s balance of payments. A sustained trade deficit could further strain foreign exchange reserves and the overall financial stability of Pakistan. To address these challenges, concerted efforts by both the government and the central bank may be necessary, including the implementation of monetary and fiscal policies.
The ongoing depreciation of the Pakistani Rupee against the US Dollar emphasizes the need to address the root causes of this decline, including foreign exchange reserves, trade balance, and increased demand for imports. To ensure economic stability, a coordinated effort is essential to implement effective policies and strategies that strengthen the currency and maintain Pakistan’s overall financial health.
