The Pakistani rupee depreciated against the US dollar by 70 paisas (-0.24 percent) in the interbank market on Thursday, while it fell by Re1 (-0.33 percent) in the open market.

By Daily Independent On Jun 12, 2023

The State Bank of Pakistan (SBP) said in a tweet that the dollar opened at Rs286.93 in the interbank market and closed at Rs287.63. During the current fiscal year 2022-23, Pakistani rupee has lost Rs81.76 against the US dollar in the interbank, while it plummeted by Rs61.20 against the greenback in the current year.

Similarly, the rupee remained on a downward trajectory against the US dollar in the open market. The greenback was quoted in the range of Rs303-306 in the open-market as compared to a range of Rs302-305 a session earlier, showing a decline of Re1 (-0.33 percent).

In a related development, foreign exchange reserves held by the State Bank of Pakistan (SBP) decreased by $179 million on a week-on-week basis, clocking in at nearly $3.91 billion as of June 2, the SBP data showed. Total liquid foreign reserves held by the country stood at $9.33 billion. Net foreign reserves held by commercial banks clocked in at $5.42 billion.

Finance Minister Ishaq Dar said last week the newly elected government should negotiate a fresh deal with the International Monetary Fund (IMF). “We are hopeful the ninth review is completed successfully, as it is necessary for Pakistan. After this, it will be only fair that it be the prerogative of a new government, after elections, to negotiate any new programme with the IMF,” he added.

According to currency experts, large debt payments to the tune of $3-4 billion will be made in the coming days, which will keep the rupee under stress. They added the market is also watching developments on the IMF front. They identified several factors contributing to the rupee’s depreciation including high import and corporate payments and dwindling foreign exchange reserves.

The continuous reduction in foreign exchange reserves is primarily due to the country’s ongoing external debt repayment obligations, highlighting the challenges Pakistan faces in maintaining a favorable balance of payments. Moreover, the rupee has faced significant pressure due to limited inflows and a challenging political climate. TLTP