Karachi, August 1, 2023 – The Pakistani Rupee (PKR) found itself facing a daunting challenge as it struggled against the relentless might of the US dollar, eventually ending at PKR 287.54 in the interbank foreign exchange market.
The rupee’s downfall was evident as it slipped from its previous closing rate of PKR 286.64 on July 31, 2023, according to the State Bank of Pakistan’s (SBP) exchange rates release.
READ MORE: Pakistani Rupee Falters Against Dollar, Hits 19-Paisa Slide
Currency experts pointed out a host of reasons for this decline, with one major factor being the recent reopening of the market after a three-day holiday. During the closure, demand for foreign currency might have piled up, intensifying pressure on the already vulnerable Pakistani Rupee once trading resumed.
The situation was further exacerbated by mounting payment demands for imports and corporate transactions, which continued to be on the rise. The government’s lenient import policy also contributed to the surge in demand for the US Dollar.
READ MORE: Pakistani Rupee Shows Modest Gain Against US Dollar
A major red flag adding to the concerns was the decline in foreign exchange reserves. The SBP reported a significant reduction of $530 million in foreign exchange reserves for the week ending on July 21, 2023. As a result, the total reserves stood at $13.534 billion compared to $14.065 billion a week earlier on July 14, 2023.
In response, Pakistan’s Finance Minister, Muhammad Ishaq Dar, took swift action and announced a plan to bolster the country’s foreign exchange reserves to $15 billion within the next 7 weeks. This measure is aimed at stabilizing the currency and fortifying the nation’s economic position.
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With the PKR continuing to struggle against the US Dollar, the government and relevant authorities are keeping a close watch on the situation, ready to implement further measures to mitigate the effects of the depreciation. Global economic conditions and factors influencing foreign exchange markets will also play a crucial role in determining the future trajectory of the PKR against major currencies.
The financial community and businesses in Pakistan are on high alert, closely monitoring developments in the foreign exchange market. Fluctuations in currency value can have a profound impact on trade, investments, and overall economic stability. As such, investors and traders are urged to exercise caution and stay informed about the latest updates in the foreign exchange market to make well-informed decisions.
