August 22, 2023 (MLN): The Pakistani rupee (PKR) remains under pressure as it hovers around its all-time low of 298.93 against the US Dollar made on May 11, 2023.
The currency has depreciated by 1.72 rupees per USD in intraday trade as compared to the previous closing of PKR 297.13 per USD.
The local unit was quoted at PKR 298.04/298.19 [12:32 pm PST] with the trades being reported at 298.85 per USD, while in the open market, PKR is being traded at 305/308 per USD.
Furthermore, the gap between the interbank and open market rate continues to widen and has exceeded the recommended 1.25% threshold set by the International Monetary Fund (IMF) for the past 12 consecutive trading sessions.
During the current financial year, PKR has depreciated against the Dollar by 12.86 rupees or 4.3%. While the current calendar year has seen PKR depreciate by 72.45 rupees or 24.24%.
The continuous pressure on the PKR can be attributed to several factors. One significant factor is the removal of restrictions on letters of credit (LCs), which has led to an increased demand for dollars and subsequently weakened the rupee.
Moreover, recalling the IMF staff report issued on July 18, 2023, a market-determined exchange rate was recommended to absorb external pressures. Consequently, the government's ability to control the rupee through trade restrictions has been limited.
As a result, import restrictions were lifted, which led to an increased demand for dollars and subsequently weakened the rupee.
Adding to these developments, Pakistan's dependence on imported oil exposes the country to the constant rise of international oil prices in the past few weeks, which also affects PKR.
