by The Pakistani rupee briefly touched the PKR 290 mark against the US dollar in the open market on Monday, sparking concerns among importers and market watchers. Although the local currency later stabilized slightly, the sudden dip highlights the fragility of Pakistan’s exchange rate amidst ongoing economic challenges and global pressures.
What Caused the Brief Dip to 290?
Multiple factors have contributed to the rupee’s temporary slide:
🔹 Increased Dollar Demand
Importers and businesses rushed to buy dollars ahead of expected price hikes, pushing up demand in the open market. This surge in demand outpaced supply, causing the rupee to weaken momentarily.
🔹 Speculative Trading
Currency dealers reported speculative buying activity, with many anticipating further rupee depreciation due to uncertainty over external financing and oil price volatility.
🔹 Delayed Inflows
Expected inflows from multilateral lenders, particularly the IMF’s extended program disbursements, have seen procedural delays. This has weakened short-term market sentiment.
🔹 Global Dollar Strength
The US dollar has been strengthening globally as the Federal Reserve maintains a tight monetary stance. This has put pressure on many emerging market currencies, including the rupee.
Rupee Briefly Hits 290 Against US Dollar in Open Market.
SBP and Government’s Response
The State Bank of Pakistan (SBP) has maintained that the exchange rate is market-driven and warned against unnecessary panic. Currency dealers have also noted that the central bank is keeping a close watch to prevent excessive volatility or manipulation in the market.
Meanwhile, the finance ministry reiterated that Pakistan’s external position remains stable, with foreign exchange reserves above $9 billion and more inflows expected in the coming weeks.
Impact on the Economy
A weaker rupee directly impacts several economic fronts:
- Import Costs Rise: Fuel, machinery, and essential goods become more expensive, adding inflationary pressure.
- Debt Servicing Burden Increases: External debt payments become costlier in rupee terms.
- Remittances Become Attractive: Overseas Pakistanis may send more remittances as the rupee weakens.
- Exporters Gain: A depreciated rupee can benefit exporters by making Pakistani goods cheaper globally.
Outlook: Stabilization Expected But Risks Remain
While the rupee has pulled back slightly from the 290 level, experts warn that volatility could persist until key economic measures are implemented, such as:
- Timely disbursement of IMF tranches
- Stability in oil prices
- Better export performance
- Containment of the current account deficit
Currency analysts suggest that the rupee may stabilize in the PKR 285–288 range in the short term, assuming no fresh shocks.
