The Pakistani currency, unable to sustain its gains, experienced a decline of 0.11% or Rs0.30, settling at Rs285.68 against the US dollar in the inter-bank market. This depreciation coincided with a persistent drop in the country’s foreign exchange reserves.
In the open market, the rupee also faced a decline of 0.33%, equivalent to Re1, reaching Rs300 against the greenback, as reported by the Exchange Companies Association of Pakistan.
The devaluation of the rupee resulted in a surge of 1.75%, or Rs4,000, in the price of gold, reaching Rs233,000 per tola (11.66 grams).
The currency depreciation is linked to the consistent decrease in foreign currency reserves for the fifth consecutive week. During the week ending May 26, 2023, the State Bank of Pakistan’s reserves diminished by $102 million, settling at $4.09 billion, primarily due to external debt repayment.
However, on Thursday, the rupee witnessed a remarkable recovery of Rs27 in the open market, according to the Forex Association of Pakistan.
Additional currency dealers in the open market reported a recovery of approximately Rs12, reaching Rs299/$, after commercial banks were permitted by the central bank to purchase US dollars from the inter-bank market for settling international payments made through credit cards by their clients.
Previously, banks were acquiring around $10 million daily from the open market to fulfill credit card payments.
Currency dealers have issued a warning that allowing banks to purchase dollars from the inter-bank market would exert pressure on the rupee, considering the relatively lower rate of Rs285 in the inter-bank market compared to Rs312 in the open market.
