Karachi, August 20, 2023 – The Pakistani Rupee (PKR) is anticipated to encounter mounting pressure against the US dollar in the upcoming week commencing on August 21, 2023.
This forecast comes as a consequence of heightened demand for foreign currency, primarily driven by the need to clear backlog consignments at the nation’s ports.
Over the course of this week, the PKR experienced a notable decline of 1.46 percent against the US dollar in the interbank market. The week commenced with the rupee valued at 291.51 against the dollar on Monday but concluded at 295.78 by the close of trading on Friday.
Analysts in the financial sector have cited several factors contributing to this trend. Notably, the continued depreciation of the rupee is largely attributed to the surging demand for dollars resulting from the release of delayed import payments and dividend disbursements.
To align with the stipulations of the International Monetary Fund (IMF), Pakistan recently eased import restrictions, leading to the backlog of payments. This measure was necessitated due to the inadequacy of foreign exchange reserves prior to the IMF’s standby arrangement.
The currency market’s fluctuations have been primarily governed by the forces of supply and demand, with minimal intervention from the central bank, according to industry experts.
In its July monetary policy statement, the State Bank of Pakistan (SBP) reiterated its commitment to maintaining a market-determined exchange rate as the first line of defense against external economic shocks while concurrently facilitating the buildup of foreign exchange reserves.
However, it is worth noting that Pakistan’s current account balance, which had previously recorded four consecutive months of surpluses, registered a deficit of $809 million in July, primarily due to increased imports. Despite this, the forex reserves held by the SBP saw a marginal uptick of $12 million, reaching a total of $8.05 billion as of the week ending August 11, 2023.