Karachi, September 5, 2023 – The Pakistani Rupee (PKR) continued its relentless decline against the US dollar on Tuesday, reaching a fresh low of PKR 307.10 at the interbank closing.
This significant depreciation marks an ongoing trend that has raised concerns about the country’s economic stability.
READ MORE: Rupee Freefall Continues: Hits New Record Low at PKR 304.45 Against the Dollar
In the interbank foreign exchange market, the rupee’s value plummeted by PKR 1.46 compared to the previous day’s closing rate of PKR 305.64. This sharp depreciation can be attributed to several factors, with analysts pointing to two primary drivers:
Growing Demand for Import Payments: The increased demand for import payments, coupled with ongoing import activity, has placed substantial pressure on the rupee’s exchange rate. Pakistan’s imports have surged, leading to higher demand for foreign currencies and contributing to the depreciation of the rupee.
READ MORE: Pakistani Rupee Hits New Low at PKR 305.54 Against the Dollar in Persistent Slide
Uncertainty in External Payment Situation: Pakistan’s external payment situation has become increasingly uncertain, adding to the downward pressure on the rupee. Concerns about the country’s ability to meet its foreign obligations have grown, leading to a loss of investor confidence.
The depreciation of the rupee has had ripple effects on domestic prices, particularly in the context of fuel prices. The caretaker government had previously announced significant increases in petroleum prices due to the currency’s volatility, placing additional financial strain on average citizens.
READ MORE: Pakistani Rupee Ends 10-Day Losing Streak Against US Dollar, Settles at PKR 305.47
Moreover, the fluctuating exchange rate has raised concerns about Pakistan’s foreign exchange reserves, which have been steadily declining. The State Bank of Pakistan (SBP) reported a significant drop of $77 million in just one week, as of August 31, 2023.
According to the SBP, Pakistan’s foreign exchange reserves decreased to $13.171 billion during the week ending August 25, 2023, down from $13.248 billion in the previous week (August 18, 2023). This depletion underscores the ongoing economic challenges confronting Pakistan.
READ MORE; Pakistani Rupee Eases Against US Dollar, Reaches New Historic Low at PKR 305.64
The rapid rupee depreciation and dwindling foreign exchange reserves have created uncertainty in financial markets and heightened concerns about inflation. Addressing these economic challenges will be crucial for stabilizing Pakistan’s economic foundation and ensuring sustainable growth in the coming months. Government measures and monetary policies will play a pivotal role in tackling these issues and restoring confidence in the financial markets.
