Karachi, July 24, 2023 – The Pakistani Rupee (PKR) has endured another significant decline, falling by PKR 1.11 against the US dollar during its ongoing 7-day losing streak.
The exchange rate closed at PKR 287.92 to the dollar, marking a decrease from last Friday’s closing rate of PKR 286.81 in the interbank foreign exchange market.
READ MORE: Pakistani Rupee Continues Downward Spiral Against Dollar, Hits 6-Day Losing Streak
The local currency’s depreciation began on July 14, 2023, and has persisted for seven consecutive trading sessions, raising concerns among market participants and economic observers.
A prominent factor contributing to the recent volatility in the currency exchange rate is the approval of a $3 billion Stand By Agreement (SBA) for Pakistan by the executive board of the International Monetary Fund (IMF). As part of this agreement, Pakistan has already received the first tranche of $1.2 billion from the IMF, with the remaining funds expected to follow.
READ MORE: PKR Continues to Slide Against USD, Closes at PKR 285.15 in Interbank
Despite the positive development of a substantial rise in Pakistan’s foreign exchange reserves, currently standing at $14.07 billion, the foreign exchange market has seemingly ignored this growth. The impressive surge in foreign exchange reserves is largely attributed to significant inflows from the IMF and other friendly countries.
The State Bank of Pakistan (SBP) reported a remarkable increase in foreign exchange reserves, with a growth of $4.227 billion in just one week. The reserves rose from $9.838 billion on July 7, 2023, to $14.07 billion by the end of the week on July 14, 2023.
Financial experts speculate that the decline in the Pakistani Rupee’s value may be influenced by the IMF’s demands for the country to adopt a more flexible exchange rate regime. By allowing market forces to determine the exchange rate, fluctuations in the currency’s value have become more pronounced.
READ MORE: Pakistani Rupee Continues to Depreciate Against Dollar; Ends at PKR 283.80
Furthermore, the recent surge in dollar demand resulting from increased import payments could also be adding pressure on the exchange rate, exacerbating the rupee’s decline.
Economic authorities in Pakistan are closely monitoring the situation and plan to take necessary steps to stabilize the currency and promote economic growth amidst these challenging developments. However, it remains uncertain how long the rupee’s losing streak will persist and how the country will address the underlying economic factors affecting its currency’s value.
READ MORE: Rupee Witnesses Significant Devaluation Against US Dollar, Plummeting to PKR 283.04
As the nation navigates through this period of financial turbulence, market participants and citizens alike are closely observing the currency’s performance and the government’s response in order to make informed financial decisions.
