Karachi, June 22, 2023 – The Pakistani Rupee (PKR) continued its upward trajectory for the third consecutive day against the US dollar in the Interbank Foreign Exchange Market, signaling a positive trend in the currency market.
Closing at PKR 286.73, the rupee recorded a gain of 25 paisas compared to the previous day’s closing of PKR 286.98. Currency experts attribute this improvement to a decrease in dollar demand, mainly due to the upcoming Eid ul Azha holidays. Additionally, the government’s efforts to stabilize the rupee value before the fiscal year-end contributed to the positive outcome.
READ MORE: PKR Gains 24 Paisas Against Dollar at Interbank Closing
However, experts caution that the demand for dollars from foreign companies operating in Pakistan remains high due to the repatriation of profits and dividends for the quarter ending June 30, 2023.
Although the recent gains are encouraging, analysts express concerns about the vulnerability of the Pakistani Rupee due to limited inflows and delays in securing a loan program from the International Monetary Fund (IMF). The failure to secure a tranche of over a billion dollars under the IMF program has added to the challenges faced by the local currency.
READ MORE: Pakistani Rupee Gains Slightly Against Dollar as Current Account Deficit Narrows
Furthermore, the decline in foreign exchange reserves is another worrisome factor affecting the stability of the Pakistani Rupee. Recent data from the State Bank of Pakistan (SBP) reveals that the official foreign exchange reserves have fallen below the recommended one-month import cover level. As of the week ending June 2, 2023, reserves decreased by $179 million to $3.912 billion, compared to $4.091 billion in the previous week (May 26, 2023).
READ MORE: Pakistani Rupee Declines Against US Dollar Due to High Demand at Week’s Start
In May 2023, Pakistan experienced a substantial increase of 43 percent in its import bill, reaching $4.275 billion compared to $3 billion in April 2023. This surge can be attributed to the government’s decision to lift restrictions on opening Letters of Credit (LCs) for import payments. Maintaining foreign exchange reserves equivalent to at least three months’ worth of import cover is recommended by international standards, emphasizing the urgency of addressing the situation.
READ MORE: PKR Goes Up 18 Paisas Against Dollar at Interbank Closing
The recent challenges faced by the Pakistani Rupee, including limited inflows and a challenging political climate, have exerted significant pressure on the currency. The record low of PKR 298.93 against the US dollar on May 11, 2023, raised concerns among investors and undermined confidence in the local currency.
