After experiencing a notable decline over the past two weeks, the Pakistani Rupee (PKR) is showing signs of resilience against the US dollar in the upcoming week, offering some reassurance to concerned observers.
As of September 1, 2023, the local currency closed at a rate of PKR 305.47 to the dollar, marking a decrease of 3.84 percent from its value on August 11, 2023, which was PKR 294.92. In the open market, where it freely trades, the rupee witnessed a 4.2 percent decline throughout the week, moving from 315 per dollar on Monday to 328 on Friday, according to the Exchange Companies Association of Pakistan.
Interbank USD Rate in Pakistan Today
| DATE | BUYING | SELLING |
|---|---|---|
| 04 Sep 23 | PKR 304.97 | PKR 305.47 |
While there are expectations of challenges for the rupee in the coming week, the pace of depreciation appears to be slowing down. Analysts acknowledge that the rupee will remain under pressure but anticipate any weakness to manifest gradually. Factors contributing to increased demand for US dollars include capital withdrawals, political instability, and economic uncertainties.
One of the factors contributing to the recent decline of the rupee is the diversion of remittances into hawala, an informal money transfer system. This diversion has driven up the demand for dollars among smugglers and informal or under-invoiced traders, as per analysts’ observations.
To meet the conditions of a $3 billion bailout package from the International Monetary Fund (IMF), import limits relaxed, further exerting pressure on the rupee’s value. Additionally, the currency has impacted by political instability and economic uncertainty.
The State Bank of Pakistan (SBP) has clarified that the Monetary Policy Committee will convene as scheduled on September 14 to determine the policy rate, dispelling rumors of an off-cycle review. Analysts anticipate that, given the likelihood of inflation remaining higher than anticipated, interest rates may increase by at least 100 basis points. The consumer price index expected to remain elevated in the short term due to the rupee’s depreciation and rising energy prices.
USD to PKR Interbank Rates History
| DATE | BUYING | SELLING |
|---|---|---|
| 04 Sep, 23 | 304.97 | 305.47 |
| 03 Sep, 23 | 304.97 | 305.47 |
| 02 Sep, 23 | 304.97 | 305.47 |
| 01 Sep, 23 | 305.04 | 305.54 |
| 31 Aug, 23 | 303.95 | 304.45 |
| 30 Aug, 23 | 301.00 | 301.50 |
| 29 Aug, 23 | 301.90 | 302.30 |
| 28 Aug, 23 | 300.50 | 301.00 |
| 27 Aug, 23 | 300.50 | 301.00 |
| 26 Aug, 23 | 300.50 | 301.00 |
During its last meeting on July 31, the SBP maintained the policy rate at 22 percent. Since September 2021, the central bank has raised the policy rate by a total of 1,500 basis points in response to economic challenges and inflationary pressures.
As the nation looks ahead to the coming week, there is a sense of cautious optimism that the PKR may display greater resilience against external pressures. Nevertheless, the situation continues to closely monitored in light of ongoing economic challenges and global financial dynamics.
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