August 16, 2023 (MLN): The Pakistani rupee (PKR) continues to face immense pressure as the currency lost around 2 rupees against the US dollar during intraday trade compared to the previous closing of PKR 291.51 per USD.
The local unit was quoted at PKR 293.21/293.46 [11:22 am PST] with the trades being reported at 293.25 per USD, while in the open market, PKR is being traded at 298/301 per USD.
The decline can be attributed to the removal of restrictions on letters of credit (LCs), which has led to an increased demand for dollars and subsequently weakened the rupee.
Moreover, Pakistan’s dependence on imported oil makes it vulnerable to the constant rise of international oil prices in the past few weeks, which also affects PKR.
To note, as per the Staff Report issued by the International Monetary Fund (IMF) on July 18, 2023, the exchange rates between Pakistani rupees and foreign currencies are to be determined free from any formal or informal influence.
The report also states that the board will ensure that the average premium between the interbank and open market rate is within 1.25% during any consecutive 5 business day period (continuous SB), once proper market functioning is restored.
