Karachi, August 21, 2023 – The Pakistani Rupee (PKR) experienced a sharp decline of PKR 1.35 against the US Dollar on Monday, edging closer to its historic low in interbank foreign exchange market.
The exchange rate recorded a depreciation of PKR 1.34 in rupee value against the dollar, closing at PKR 297.13 compared to last Friday’s closing rate of PKR 295.78 in the interbank foreign exchange market.
READ MORE: Rupee Dips Sharply Against Dollar, Hits PKR 295.78 Mark in Interbank Trading
Currency experts have identified several contributing factors to this decline. Increased demand for the US Dollar for import purposes and corporate payments has exerted substantial pressure on the local currency. Additionally, concerns over dwindling foreign exchange reserves and impending government repayments for foreign debt have further added to the rupee’s devaluation.
The situation has raised concerns as the rupee’s value approaches its historical low of PKR 298.93, which was recorded on May 11, 2023. A significant driver behind this precarious situation 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: Rupee Maintains Firmness Against Dollar, Closes at PKR 294.92
Furthermore, the limited foreign exchange reserves have contributed to the US Dollar’s upward surge. The latest data from the State Bank of Pakistan indicates a slight improvement in the country’s foreign exchange reserves, reaching $13.38 billion by the week ending August 11, 2023. This represents an increase of $40 million compared to the previous week’s reserves of $13.34 billion.
Although 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: Pakistani Rupee Nears Record Low, Plunges to PKR 294.93 Against US Dollar
Financial experts are advising caution among various stakeholders, including market participants, investors, and traders. The escalating volatility in the exchange rate raises 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 assess the direction of the rupee and its impact on the broader financial health of the nation. The authorities are likely to closely monitor and take measures to stabilize the currency and restore confidence in Pakistan’s economic stability.
READ MORE: Pakistani Rupee Plunges to PKR 291.51 Against Dollar on First Day of Interim Government
