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The Pakistani rupee has witnessed a sharp decline in its value for the fifth straight working day, painting a grim picture of the country’s economic situation. The currency depreciated by 0.58%, losing Rs1.66, and hit a one-month low of Rs286.81 against the US dollar in the interbank market on Friday.
Over the past five working days, the rupee has seen a cumulative fall of 3.60, amounting to Rs10.34, as reported by the central bank. The currency’s descent was not restricted to the interbank market. In the open market, the rupee devalued by 0.5%, dropping by Rs1.50, and traded at Rs291 per US dollar compared to Rs289.50 the previous day. Consequently, the exchange rate disparity between the interbank and open markets settled within the IMF-directed level of 1.25%, currently hovering around Rs4.
In response to this liquidity crisis in banks, the State Bank of Pakistan (SBP) took a proactive measure. The SBP injected Rs1.19 trillion into the banking system through open market operations for a relatively longer period of 77 days. Commercial and Shariah-compliant banks received these funds at a rate of return of 22.15% and 22.37%, respectively.
Gain of Pakistani Rupee against US Dollar and IMF Program
Interestingly, amidst the economic tumult, gold made its way to the spotlight. The precious metal experienced a price surge of Rs1,800 per tola (11.66 grams) to Rs222,900 in Pakistan. This increase is primarily due to the rupee’s depreciation on Friday. Even though the international market showed a drop of $12 per ounce (31.10 grams) to $1,966, the local gold price was adjusted upwards.
In the face of these challenges, Pakistan’s economy urgently needs robust strategies to stabilize its currency and strengthen its financial market’s resilience.
