Karachi, September 6, 2023 – The Pakistani Rupee (PKR) showed signs of recovery by gaining 12 paisas against the US dollar in a highly volatile trading session in the interbank foreign exchange market on Wednesday.
The exchange rate closed at PKR 306.98 to the dollar, marking an improvement from the all-time low of PKR 307.10 recorded the previous day in the interbank foreign exchange market.
READ MORE: Rupee Hits Fresh Low at PKR 307.10 to Dollar in Fathomless Journey
Currency analysts noted that trading remained turbulent throughout the day, with the dollar initially witnessing gains but ultimately ending with the rupee’s value recovering.
However, experts caution that the foreign exchange market is likely to remain highly volatile in the coming days due to an increased demand for dollars for foreign payments. Factors contributing to this volatility include:
Pakistan has experienced a surge in imports, leading to an elevated demand for foreign currencies and contributing to the rupee’s depreciation. This demand is driven by ongoing import activities.
READ MORE: Rupee Freefall Continues: Hits New Record Low at PKR 304.45 Against the Dollar
Concerns about Pakistan’s ability to meet its foreign obligations have grown, creating downward pressure on the rupee. This uncertainty has led to a loss of investor confidence.
The depreciation of the rupee has had ripple effects on domestic prices, particularly in the context of fuel prices. The caretaker government previously announced significant increases in petroleum prices due to currency volatility, placing additional financial strain on citizens.
READ MORE: Pakistani Rupee Hits New Low at PKR 305.54 Against the Dollar in Persistent Slide
Pakistan’s foreign exchange reserves have been steadily declining. The State Bank of Pakistan (SBP) reported a significant drop of $77 million in just one week, as of August 31, 2023. This depletion raises concerns about the country’s ability to manage its external financial obligations.
According to the SBP, Pakistan’s foreign exchange reserves decreased to $13.171 billion during the week ending August 25, 2023, down from $13.248 billion in the previous week (August 18, 2023). These economic challenges, including the rapid rupee depreciation and dwindling foreign exchange reserves, have created uncertainty in financial markets and heightened concerns about inflation.
READ MORE: Pakistani Rupee Ends 10-Day Losing Streak Against US Dollar, Settles at PKR 305.47
Addressing these economic challenges will be crucial for stabilizing Pakistan’s economic foundation and ensuring sustainable growth in the coming months. Government measures and monetary policies will play a pivotal role in tackling these issues and restoring confidence in the financial markets.
