Rupee starts 2023 by hitting 3-month low
KARACHI: On the first working day of 2023, the Pakistani rupee continued its downward trend, dropping 0.22% (or Rs0.51) to a three-month low of Rs226.94 against the US dollar in the interbank market on Tuesday.
Rupee starts 2023 by hitting 3-month low. After stabilizing at Rs217.79 in early October, the rupee has fluctuated over the last three months and has fallen by 4% (or Rs9.15) during that time.
On Friday of last week, the last working day of the year, it was worth Rs226.63 versus the dollar, a 22% decline from the previous calendar year.
According to analysts, “the rupee is sliding due to low foreign exchange reserves and high demand for import payments and debt repayment”.
Given that the International Monetary Fund (IMF) requires a market-based exchange rate in order to resume its $6.5 billion loan program, it will likely continue to fall.
Ishaq Dar, the finance minister, has some degree of authority over it. However, a steady decline shows that the government has decided to reinstate the market-based exchange rate mechanism.
“The actual value of the rupee is the one being quoted in the black market, where it stands at Rs250-260 against the greenback these days,” said analysts.
Prior to becoming finance minister for a fourth time in late September 2022, Dar predicted that the rupee will be fairly valued in the region of Rs180-200. However, it never fell to that point and only rose to Rs217.79 in October.
On July 28, 2022, the currency depreciated to its lowest point ever, about Rs240. By the end of the current fiscal year, on June 30, 2023, analysts predicted that the currency will depreciate even more and fall to a range of $250–270 versus the US dollar.
At $5.8 billion, Pakistan’s foreign exchange reserves have reached a nine-year low, and the government still has to raise $73 billion to pay off its foreign debt over the course of the next three years, to the end of FY25.
