The Pakistani Rupee (PKR) witnessed a sharp decline against the US Dollar on Tuesday, weakening by 67 paisas due to increased demand for import and corporate payments. The rupee closed at Rs154.37 against the dollar in the interbank foreign exchange market, compared to the previous Friday’s closing of Rs153.70.
Currency experts attributed the decline to growing import demand, driven in part by expectations of stronger domestic economic activity. An improved GDP growth forecast for Pakistan has signaled an uptick in demand for both imported raw materials and finished goods, particularly for industrial and manufacturing sectors. This has put downward pressure on the local currency, as businesses rush to fulfill their foreign currency obligations for imports.
“The rise in economic activity following positive growth forecasts has resulted in increased demand for imported materials, especially for key industries like manufacturing and construction,” noted a senior currency analyst. “As businesses anticipate higher production, there’s been a surge in foreign currency payments to secure the necessary raw materials and finished products from abroad, causing the rupee to depreciate.”
The growing need for imports, however, is a double-edged sword. While it supports domestic economic expansion, the demand for foreign exchange is pushing the rupee lower. The outlook for the rupee in the near term remains clouded as experts forecast further depreciation, particularly if import payments continue to rise.
“The increased demand for the US Dollar, particularly for import payments, is likely to weigh on the rupee in the coming days,” warned another market expert. “The pressure could escalate if corporate sectors continue to make payments in dollars to meet their financial obligations.”
Pakistan’s import-heavy economy has always been vulnerable to fluctuations in foreign exchange markets, and the recent slide of the rupee signals potential inflationary concerns. A weaker rupee makes imports more expensive, which can further burden industries reliant on foreign goods and materials. Additionally, rising global oil prices and other external factors may exacerbate the rupee’s depreciation.
While Pakistan’s central bank has taken measures to maintain exchange rate stability, the persistent demand for foreign currency, driven by corporate and import payments, is likely to continue testing the rupee’s resilience in the short term.
For now, market participants and businesses will be closely watching developments in the foreign exchange market, as further depreciation could impact inflation, interest rates, and the overall cost of doing business in the country.
