Karachi, June 6, 2023: The Pakistani Rupee (PKR) experienced its third consecutive loss against the US dollar on Tuesday, closing at PKR 286.56 in the interbank foreign exchange market.
The local currency depreciated by 37 paisas, ending at PKR 286.56 to the dollar compared to the previous day’s closing of PKR 286.19 in the interbank foreign exchange market. Over the past three sessions, the rupee has lost PKR 1.18 against the greenback.
READ MORE: Pakistani Rupee Eases by 51 Paisas to Dollar in Interbank on June 5, 2023
Currency experts attribute this depreciation to several factors, including high import and corporate payments that have exerted pressure on the rupee at the beginning of the week. Additionally, the dwindling foreign exchange reserves have contributed to the devaluation of the currency.
According to a statement from the central bank, Pakistan’s foreign exchange reserves declined by $218 million, reaching $9.513 billion by the week ending May 26, 2023, following the previous week’s reserves of $9.731 billion as of May 19, 2023. This continuous decline in foreign exchange reserves primarily stems from the country’s ongoing external debt repayment obligations, highlighting the challenges Pakistan faces in maintaining a favorable balance of payments.
READ MORE: PKR faces slight loss against dollar in interbank
It is worth noting that Pakistan’s foreign exchange reserves had reached an all-time high of $27.228 billion by the week ending August 27, 2023. However, since then, the country has experienced a significant decline, amounting to $17.715 billion.
In recent weeks, the Pakistani Rupee has come under significant pressure due to limited inflows and a challenging political climate. On May 11, 2023, the rupee hit a record low of PKR 298.93 against the US dollar, raising concerns among investors and undermining confidence in the local currency.
Exchange rates are influenced by various factors, including supply and demand dynamics, market sentiment, and economic indicators. The recent devaluation of the Pakistani Rupee against the US dollar reflects the prevailing economic conditions and highlights the urgent need for measures to stabilize the currency.
READ MORE: Pakistani Rupee Makes Nominal Gain Against US Dollar Amid Inflows
The State Bank of Pakistan, as the country’s central bank, plays a crucial role in managing the exchange rate and implementing policies to foster stability. To restore confidence in the Pakistani Rupee, the government must address economic challenges, attract foreign investment, and improve the overall economic outlook through prudent economic policies and structural reforms.
Market participants, policymakers, and financial experts will closely monitor exchange rate movements to assess their potential impact on various sectors of the economy. By analyzing these fluctuations and developing strategies, efforts will be made to mitigate factors that contribute to volatility in the foreign exchange market.
READ MORE: PKR loses 27 paisas against dollar, closes at PKR 285.42
While short-term fluctuations are common, sustaining stability and achieving long-term growth require addressing underlying economic issues. The commitment of the Pakistani government to implementing prudent economic policies and structural reforms will play a vital role in restoring confidence and strengthening the Pakistani Rupee in the long run.
