Karachi, August 20, 2023 – The Pakistani Rupee (PKR) faced mounting pressure against the US dollar during midday trading on Monday, with the rupee weakening by 47 paisas to reach PKR 296.25 against the dollar in interbank trading.
This decline was anticipated and comes as a consequence of increased demand for foreign currency, primarily driven by the urgent need to clear a backlog of consignments at the nation’s ports.
READ MORE: PKR May Face Increasing Pressure Against Dollar for Week Starting August 21
Throughout the week, the PKR witnessed a significant depreciation of 1.46 percent against the US dollar in the interbank market. The week commenced with the rupee valued at 291.51 against the dollar on Monday but concluded at 295.78 by the close of trading on Friday.
Financial analysts have identified several factors contributing to this trend. Most notably, the ongoing depreciation of the rupee is largely attributed to the rising demand for dollars, driven by the release of delayed import payments and dividend disbursements.
READ MORE: Rupee Dips Sharply Against Dollar, Hits PKR 295.78 Mark in Interbank Trading
To align with the stipulations of the International Monetary Fund (IMF), Pakistan recently eased import restrictions, resulting in a backlog of payments. This measure was necessitated due to the inadequacy of foreign exchange reserves before the IMF’s standby arrangement. The currency market’s fluctuations have been primarily influenced by the forces of supply and demand, with minimal intervention from the central bank, according to industry experts.
READ MORE: Rupee Maintains Firmness Against Dollar, Closes at PKR 294.92
In its July monetary policy statement, the State Bank of Pakistan (SBP) reiterated its commitment to maintaining a market-determined exchange rate as the first line of defense against external economic shocks, while also aiming to build foreign exchange reserves.
However, it is noteworthy that Pakistan’s current account balance, which had previously recorded four consecutive months of surpluses, registered a deficit of $809 million in July, primarily due to increased imports. Despite this, the forex reserves held by the SBP experienced a slight increase of $12 million, reaching a total of $8.05 billion as of the week ending August 11, 2023.
READ MORE: Pakistani Rupee Nears Record Low, Plunges to PKR 294.93 Against US Dollar
