In mid-day interbank trading, the Pakistani Rupee (PKR) on Tuesday experienced an all-time low against the US Dollar. The local currency closed at PKR 288 against dollar.
During mid-day interbank trading, the Rupee depreciated by Rs2.96 and reached a closing rate of PKR 288, in contrast to the previous day’s closing rate of Rs285.04.
READ MORE: Rupee ends near all-time low against dollar at PKR 285.04
On March 2, 2023, the PKR hit an all-time low of PKR 285.09 against the dollar.
Experts attribute this decline to the delay in the International Monetary Fund (IMF) loan program and the drop in foreign exchange reserves.
As of March 24, 2023, Pakistan’s foreign exchange reserves dropped to $9.816 billion, down $323 million from the previous week’s $10.139 billion on March 17, 2023. This is a significant drop from the record high of $27.228 billion on August 27, 2021, with a subsequent decline of $17.412 billion.
READ MORE: PKR slips by 13 paisas to dollar on falling forex reserves
Despite the decrease, Pakistan’s State Bank’s official reserves provide almost one month’s import cover, with recorded imports of $4 billion in February 2023. A central bank should ideally maintain reserves equivalent to three months’ worth of import payments.
It is worth noting that the rupee had strengthened against the dollar due to a significant contraction in the current account deficit. However, lack of inflows put pressure on the rupee, with exports falling by 8.65% and workers’ remittances dropping by 11% during the first eight months (July-February) of 2022/2023, according to official data.
READ MORE: PKR recovers against dollar to end at PKR 283.66
The decline in the value of the rupee can be attributed to economic challenges, uncertain political conditions, and depleting foreign exchange reserves that have put continuous pressure on the local currency in recent years.
Pakistan has been facing a foreign exchange crisis due to a number of factors, including a decrease in foreign exchange reserves, a widening current account deficit, and delays in obtaining loans from international organizations such as the International Monetary Fund (IMF).
As a result of these issues, the Pakistani Rupee (PKR) has depreciated significantly against major currencies such as the US dollar. In March 2023, the PKR hit an all-time low against the dollar, and it has continued to experience volatility since then.
READ MORE: PKR weakens by 37 paisas against dollar in interbank
Pakistan’s foreign exchange reserves have declined significantly over the past few years, from a record high of $27.228 billion in August 2021 to $9.816 billion as of March 24, 2023. This has put pressure on the country’s central bank to manage the exchange rate and maintain adequate import cover.
The country’s current account deficit has also widened, which has put additional pressure on foreign exchange reserves. Despite efforts to reduce the deficit, exports have decreased and workers’ remittances have also declined, which has contributed to the crisis.
To address the foreign exchange crisis, Pakistan has been seeking loans and financial assistance from international organizations such as the IMF. However, delays in obtaining these loans have prolonged the crisis, and Pakistan continues to face challenges in managing its foreign exchange reserves and stabilizing the value of its currency.
READ MORE: PKR registers nominal recovery against dollar in interbank
