The Pakistani rupee has hit a historic low against the US dollar due to increased demand for the dollar following eased import restrictions and political uncertainty ahead of the general elections.
Pakistan's rupee dropped to a record low due to the easing of import restrictions, which has increased demand for the dollar.
The depreciating exchange rate of the Pakistani rupee against the US dollar is leading to a potential economic disaster, with increased inflation, higher prices for petroleum and fuel, and a rise in poverty and unemployment.
The Pakistani rupee weakened further against the US dollar in the interbank market due to higher demand and uncertainty, while the open market remained stable; however, insiders noted that currency dealers were selling the dollar at higher rates in the open market.
The rupee's decline against the US dollar is being attributed to the powerful influence of the grey market and the International Monetary Fund's involvement in Pakistan's financial system, leading to a loss of control over the exchange rate and economic uncertainties.
Protests have erupted across Pakistan due to the recent increase in electricity prices, which are causing financial strain on households already dealing with high inflation and stagnant incomes, and the government's inefficiency in reducing transmission losses and indirect taxes is exacerbating the problem.
Pakistan's external vulnerabilities are set to worsen due to shrinking dollar inflows and increasing debt servicing, putting pressure on foreign exchange reserves and potentially leading to their depletion.
The Pakistani rupee has fallen below 300 to a US dollar due to factors such as the rise of the dollar, uncertainty surrounding general elections, and a political/judicial/constitutional crisis, resulting in eroded business confidence, increased inflation, and reduced industrial output.
The consistent devaluation of the Pakistani rupee is causing inflation and forcing the central bank to raise interest rates, leading to concerns about the economy and market confidence.
The recent increase in energy prices in Pakistan has led to protests over high inflation and electricity bills, with demonstrators burning utility bills, blocking highways, and attacking power company offices. The caretaker government has refused to lower energy prices without approval from the IMF, and has further increased petrol and diesel prices by over 14 Pakistani Rupees (PKR), surpassing PKR 300.
The relentless surge in pressure on the exchange rate and price level in Pakistan over the past two and a half years can be attributed to serious malfunctions on the balance of payments and fiscal accounts, which have thrown the monetary aggregates far from their projected path to stability. This has led to inflation and exchange rate pressure, and traditional IMF-mandated adjustments alone may not be enough to resolve the situation.
Pakistani traders go on strike across the country to protest against the high cost of living, including fuel and utility bills and the depreciation of the rupee, leading to widespread discontent among the public.
The Pakistani rupee is expected to trade within a narrow range against the dollar in the upcoming week following its recent sharp depreciation, although some analysts anticipate continued pressure on the currency due to capital withdrawals, political unrest, and economic uncertainty.
The current economic crisis in Pakistan is driven by high inflation, mismanaged policies, and failure to ensure price stability, leading to a weakened currency and a struggling middle class, but implementing radical reforms such as demonetization and swapping out foreign currency debt can potentially alleviate the situation and revive the economy.
Millions of Pakistanis are facing the devastating consequences of an unprecedented economic crisis, with rising inflation, soaring fuel and electricity prices, and a weakening currency, leaving low-income households struggling to make ends meet.
The Indian Rupee is weakening against the US dollar, causing concern for Indian authorities who fear that it could impact the country's import and export sectors, with suspicions that India may be taking measures to limit the dollar's growth; similarly, other BRICS member countries like China and Japan are also trying to curb the US dollar's growth.
The Pakistani military's crackdown on the black market has led to a significant influx of dollars into the interbank and open markets, resulting in the recovery of the Pakistan rupee and its strengthening beyond the official rate, with the campaign being credited to army chief General Asim Munir.
The Pakistani rupee has depreciated significantly in the first three weeks of the interim government's tenure, reaching a record low and making it the worst-performing Asian currency this quarter, due to factors such as a change in government and high inflation. The State Bank of Pakistan is implementing measures to address the economic challenges, including reforming the exchange rate and modernizing the banking system.
Despite Pakistan's immense potential in various sectors such as energy and agriculture, the country continues to face economic injustice and elite capture, which undermines social justice and human development, according to economist Dr Hafiz Pasha; in recent months, however, the government has taken action against electricity theft, currency smuggling, and commodity hoarding to combat these issues.
Pakistan's exports saw a significant increase of 22.45% in the first two months of the fiscal year 2023-24, reaching Rs1.27 trillion, while imports decreased by 2.42%.
The Sindh governor claims that the Pakistani rupee will further decline against the US dollar, with petrol prices expected to fall on October 1 due to the appreciation of the rupee and the government's crackdown on currency smugglers, hoarders, and black marketers.
The Pakistani rupee has gained significantly against the US dollar due to administrative measures taken by the interim government, leading to a possible reduction in petroleum prices in the upcoming review.
Pakistan is facing a major economic crisis with high inflation, insufficient public resources, and policy decisions influenced by vested interests, according to the World Bank. The country needs to make hard choices and prioritize coordinated, efficient, and adequately financed service delivery to improve human development outcomes. Additionally, the Pakistani Rupee has reached a record low against the US dollar.
Short-term inflation in Pakistan reaches new high as retail prices of petroleum products soar, leading to increased transport fares and higher cost of moving goods; prices of essential vegetables also see a rise, except for tomatoes which experience some relief after the reopening of the border with Afghanistan.
The Pakistani rupee strengthened against the US dollar in the interbank market due to the government's crackdown on the money market.
The Pakistani rupee has continued to rise against the US dollar, trading below Rs290, due to a crackdown on the money market, but analysts warn that the gains may only be short-term.
The author argues that there are underlying pressures responsible for an ongoing spiral of devaluation in Pakistan's economy, and these pressures make it difficult to sustain recent gains in the value of the rupee.
An obsession with controlling the rupee-dollar exchange rate in Pakistan has led to ineffective administrative measures and failed attempts at stabilization, as the country's heavy dependence on imports and mounting external debt hinder economic restructuring and contribute to the rupee's depreciation. The need for a long-term plan focused on increasing exports, investment, and macroeconomic stability is emphasized.
The Pakistani rupee has strengthened against the US dollar for a month due to a military-backed crackdown on currency smugglers, with analysts expecting the rupee to reach 280 to the dollar in the near future.
The Pakistani rupee is expected to strengthen further, potentially falling below 280 against the US dollar, due to factors such as the anticipation of the IMF's next tranche, improved balance of payments, and government actions against illegal dollar trade.
Illegal activities such as black market currency trade, gold smuggling, and oil smuggling are costing Pakistan's economy USD 23 billion per year, leading to currency devaluation, inflation, and a loss of government revenue.
