Karachi, August 18, 2023 – In a concerning development, the Pakistani Rupee (PKR) experienced a significant drop against the US Dollar, reaching a worrisome level of PKR 295.78.
The currency’s value plummeted by 86 paisas, closing at PKR 295.78 in the interbank foreign exchange market, compared to the previous day’s closing rate of PKR 294.92.
READ MORE: Rupee Maintains Firmness Against Dollar, Closes at PKR 294.92
Currency experts have attributed this decline to a multitude of factors. A surge in demand for the US Dollar for import purposes and corporate payments has exerted pressure on the local currency.
Additionally, dwindling foreign exchange reserves and impending government repayments for foreign debt have also contributed to the rupee’s devaluation.
READ MORE: Pakistani Rupee Nears Record Low, Plunges to PKR 294.93 Against US Dollar
The situation has raised concerns as the rupee’s value teeters near its historical low of PKR 298.93, which was established on May 11, 2023. One of the major driving forces behind this critical scenario is a recent policy adjustment by the State Bank of Pakistan (SBP), allowing commercial banks to initiate import payments through letters of credit. This policy shift has strained the already vulnerable rupee, hastening its decline.
READ MORE: Pakistani Rupee Plunges to PKR 291.51 Against Dollar on First Day of Interim Government
Furthermore, the limited foreign exchange reserves have played a role in the dollar’s upward surge. The latest data from the State Bank of Pakistan indicates a slight improvement in the country’s foreign exchange reserves, which have reached $13.38 billion by the week ending August 11, 2023. This marks an increase of $40 million compared to the previous week’s reserves of $13.34 billion. While this uptick provides a degree of economic stability, it remains significantly lower than the peak of $27.2 billion observed in August 2021.
READ MORE: Rupee Struggles Against Dollar, Falls to PKR 288.49 in Interbank
Financial experts are urging caution among various stakeholders, including market participants, investors, and traders. The escalating volatility in the exchange rate has raised alarms about potential far-reaching implications for trade, investments, and the overall economic landscape.
As the situation continues to evolve, close attention will be necessary to gauge the direction of the rupee and its impact on the broader financial health of the nation.
