The US dollar lost value against the Pakistani Rupee (PKR) on Thursday, ending at PKR 284.91, as markets anticipate the finalization of the 9th review of Pakistan’s International Monetary Fund (IMF) program.
The PKR appreciated by 1.71 in rupee value from the previous day’s closing of PKR 286.62 to the dollar in the interbank foreign exchange market. Experts suggest that after assurances from friendly countries, Pakistan is hoping to finalize the 9th review of the IMF program under the Extended Fund Facility (EFF).
READ MORE: Pakistani rupee makes recovery to PKR 286.62 against dollar after historic fall
The PKR had depreciated earlier due to a lack of inflows and delays in funds from the IMF, as well as political uncertainty surrounding the provincial elections. However, experts noted that the recent Eid-related inflows and relaxation in instructions by the State Bank of Pakistan (SBP) regarding export proceeds helped the recovery of the rupee value during the day.
READ MORE: PKR falls to historic low at Rs288.43 to dollar amidst volatile conditions
The recent depreciation of the PKR can also be attributed to the cancellation of the finance minister’s visit to the US to attend summer meetings of the International Monetary Fund (IMF) and the World Bank, despite Saudi Arabia’s assurance of providing assistance to Pakistan. On March 31, 2023, the State Bank of Pakistan announced a decrease of $55 million in the country’s foreign exchange reserves, falling to $9.76 billion, a decline from $9.815 billion the week before.
READ MORE: Rupee suffers significant drop to PKR 287.09 against dollar
Although the foreign exchange reserves of the State Bank of Pakistan still exceed the level required to provide more than one month’s worth of import cover, they have fallen below the ideal level of foreign exchange reserves equivalent to three months’ worth of import payments. This decline in the value of the PKR can be attributed to economic challenges, political uncertainties, and depleting foreign exchange reserves.
READ MORE: Pakistani Rupee resumes falling journey against dollar, ends at PKR 284.65
Despite seeking loans and financial assistance from international organizations such as the IMF, delays in obtaining these loans have prolonged the crisis, and the country continues to face challenges in managing its foreign exchange reserves and stabilizing the value of its currency. Pakistan has witnessed an 11% decline in remittances during the first nine months (July-March) of fiscal year 2022/2023 to $20.53 billion, compared to $23.02 billion during the same period last fiscal year. The country’s foreign exchange crisis is a matter of concern, and experts believe that swift measures are needed to stabilize the currency and attract more foreign investment.
