Karachi, March 1, 2024 – The Pakistani Rupee (PKR) experienced a dip, closing the week at PKR 279.19 against the US dollar on Friday.
The interbank foreign exchange markets witnessed a decline of PKR 0.08 in the rupee’s value compared to the previous day’s closing rate of PKR 279.11.
Currency market experts have pointed to the surge in dollar demand for imports and corporate payments as the primary catalyst behind the rupee’s depreciation. The downward trend is exacerbated by a decrease in foreign exchange reserves, which, in turn, exerts pressure on the local currency against the greenback.
As of the week ending February 23, 2024, Pakistan’s total exchange reserves stood at $13.039 billion, marking a decline from $13.098 billion the previous week (February 16, 2024). The decrease in reserves has raised concerns among economic analysts, who believe it is a significant factor contributing to the rupee’s decline.
While this dip in reserves and the subsequent fall in the rupee’s value are noteworthy, it is essential to put these figures into perspective. The current reserves, even with the decrease, are still higher than the levels observed in August 2021 when Pakistan faced a different economic scenario.
The economic landscape in August 2021 was characterized by various challenges, including a widening current account deficit, inflationary pressures, and uncertainty related to the global COVID-19 pandemic. The country, at that time, was grappling with the need for financial stability and was engaged in negotiations with the International Monetary Fund (IMF) to secure a bailout package.
Comparing the present situation to that of August 2021 underscores the resilience of Pakistan’s economy in the face of changing circumstances. While challenges persist, the nation has made progress in addressing economic vulnerabilities and ensuring a more stable financial environment.
Market observers suggest that monitoring and managing the balance between imports and exports, along with prudent fiscal policies, will be crucial in mitigating the impact of external factors on the exchange rate. Additionally, policymakers are expected to focus on bolstering foreign exchange reserves to enhance the country’s capacity to withstand economic shocks.
The Central Bank’s interventions and monetary policy decisions will likely play a pivotal role in stabilizing the currency and addressing concerns related to the foreign exchange reserves. The resilience demonstrated in the past, coupled with proactive measures, could contribute to restoring confidence in the economy and maintaining a stable currency in the coming months.
As the week concludes with the rupee at PKR 279.19 against the dollar, attention will now turn to the upcoming economic indicators and policy decisions that will shape the trajectory of Pakistan’s currency in the weeks and months ahead.
