Karachi, July 18, 2023 – In a notable turn of events, the Pakistani Rupee (PKR) experienced a significant devaluation against the US dollar, reaching a new low of PKR 283.04 in the interbank foreign exchange market on Tuesday.
This development comes as the State Bank of Pakistan (SBP) released the latest exchange rate, indicating a decline of PKR 3.78 from the previous day’s closing rate of PKR 279.26.
Import Payment Demand Triggers Sharp Decline, While Government Strives to Maintain Exchange Rate Flexibility
READ MORE: Rupee Drops PKR 1.67 Against Dollar Amid Surging Import Payment Demand
Currency experts attribute the sharp fall in the rupee to a surge in demand for import payments. The government’s imposition of conditions on import payments has resulted in a backlog of import consignments. However, following the recent approval by the central bank, customs clearance procedures are now in full swing, and banks are issuing letters of credit without restrictions.
READ MORE: Pakistani Rupee Weakened Against US Dollar to PKR 277.59 at Interbank Closing
According to experts, the latest loan agreement with the International Monetary Fund (IMF) requires Pakistan to maintain a flexible exchange rate, allowing market forces to determine the rupee’s value. This move aims to ensure a more balanced and market-driven approach to currency valuation.
READ MORE: Pakistani Rupee Strengthens to PKR 276.46 Against Dollar After IMF Bailout Boost
Amidst these developments, the SBP has witnessed substantial foreign inflows over the past week, bolstering the country’s foreign exchange reserves. Government officials are optimistic, claiming that the reserves could reach a promising $14 billion in the upcoming weeks.
The devaluation of the Pakistani Rupee against the US dollar highlights the challenges faced by the nation’s economy. The surge in import payment demand and the subsequent clearance process have contributed to the depreciation. However, as the government adheres to the IMF agreement, it aims to maintain a flexible exchange rate that responds to market dynamics.
READ MORE: PKR Gains Momentum in Anticipation of Inflows
Experts and market observers will closely monitor the fluctuations in the exchange rate in the coming days. Additionally, the progress of customs clearance and the impact of foreign inflows on the country’s foreign exchange reserves will play a vital role in determining the rupee’s future trajectory.
