Due to a fall in foreign exchange reserves, the Pakistani Rupee (PKR) slipped by 13 paisas against the dollar and closed at PKR 283.79 in the interbank foreign exchange market, compared to the previous day’s closing of PKR 283.66.
Currency experts stated that the delay in the loan program under the International Monetary Fund (IMF) and the decrease in foreign exchange reserves were the main reasons behind the pressure on the local currency.
READ MORE: PKR recovers against dollar to end at PKR 283.66
On March 2, 2023, the rupee recorded its all-time low of PKR 285.09 to the dollar.
As of March 24, 2023, Pakistan’s foreign exchange reserves have dropped to $9.816 billion, marking a decline of $323 million compared to the previous week’s reserves of $10.139 billion on March 17, 2023.
READ MORE: PKR weakens by 37 paisas against dollar in interbank
This is a significant decrease from the record high of $27.228 billion in foreign exchange reserves on August 27, 2021, with a subsequent decline of $17.412 billion.
Despite the decline, the State Bank of Pakistan’s official reserves still provide almost one month’s import cover, with recorded imports of $4 billion in February 2023. Ideally, a central bank should maintain reserves equivalent to three months’ worth of import payments.
READ MORE: PKR registers nominal recovery against dollar in interbank
It is worth noting that the exchange rate had previously strengthened against the dollar due to a significant contraction in the current account deficit.
According to official data, Pakistan’s current account deficit narrowed by 313% during the first eight months (July-February) of 2022/2023. However, lack of inflows kept the rupee under pressure, with exports decreasing by 8.65% and workers’ remittances recording a decline of 11% during the same period.
READ MORE: Rupee loses 38 paisas against dollar to end at PKR 283.58 in interbank
The local unit has been under continuous pressure in recent years due to economic challenges and uncertain political conditions. The decline in rupee value can also be attributed to depleting foreign exchange reserves.
