KARACHI – The Pakistani rupee (PKR) plunged to a record low of Rs174.43 against the dollar in the interbank foreign exchange market on Monday, marking a significant depreciation in the local currency.
The rupee lost 43 paisas compared to Friday’s closing rate of Rs174 against the dollar, continuing its downward trajectory amid mounting pressure on the country’s foreign exchange reserves and external financing needs.
Currency analysts attributed this sharp decline in the rupee to an increased demand for the dollar, particularly due to the reopening of the market following the weekend. The start of the business week typically sees a surge in trade and remittance-related transactions, further driving up the need for dollars.
Additionally, the rising import payments and scheduled external debt repayments by the State Bank of Pakistan (SBP) have compounded the pressure on the rupee. Experts say the persistent demand for the dollar is being fueled by a combination of factors including elevated global commodity prices and Pakistan’s growing trade deficit.
The SBP’s official foreign exchange reserves fell sharply by $1.646 billion, standing at $17.492 billion as of the week ending October 15, 2021. This was a notable drop from $19.138 billion recorded a week earlier, raising concerns about the country’s ability to manage future external obligations.
According to recent data from the SBP, Pakistan’s current account deficit widened drastically to $3.4 billion during the first quarter (July–September) of fiscal year 2021-22. This stands in stark contrast to the surplus of $865 million posted during the same period in the previous year.
Adding to the economic strain, the import bill surged by an alarming 66.11 percent to $18.74 billion during Q1 of the current fiscal year, compared to $11.28 billion in the corresponding quarter last year.
The ongoing pressure on the rupee, combined with the rising dollar outflows, has intensified concerns about macroeconomic stability. Policymakers are expected to closely monitor the situation and may consider corrective measures to curb the dollar flight and stabilize the rupee in the coming weeks.