The Pakistani rupee weakened by 61 paisas against the US dollar on Monday, primarily due to a significant drop in the country’s foreign exchange reserves.
The rupee closed at Rs164.85 in the interbank foreign exchange market, down from last Friday’s closing rate of Rs164.24. Currency dealers said the pressure on the rupee was evident as the market opened after a two-day weekend, with increased demand for the dollar and falling reserves contributing to the decline.
According to official data, Pakistan’s total foreign exchange reserves dropped by $215 million, falling to $16.705 billion by the week ending June 5, 2020. This was a decline from $16.92 billion recorded a week earlier, signaling continued strain on the country’s external position.
The reserves held specifically by the State Bank of Pakistan (SBP) showed a sharper fall, dropping by $266 million to reach $10.096 billion, compared to $10.362 billion in the preceding week. The SBP attributed this decrease to external debt repayments amounting to $301 million during the week.
Currency market analysts noted that the decline in reserves is limiting the central bank’s capacity to stabilize the rupee, making it more vulnerable to short-term pressures. They warned that unless inflows from exports, remittances, or international lenders increase, the rupee could face further depreciation.
Sustaining reserves at a healthy level is essential for managing external obligations and maintaining investor confidence in the country’s financial stability.