Reasons for depreciation of Pak Rupee against US dollar

BlogsReasons for depreciation of Pak Rupee against US dollar

USD-PKR Exchange Rate

The movement in the USD-PKR exchange rate is based on demand and supply of foreign exchange in the FX market and prevailing economic conditions under a market-based flexible exchange rate arrangement.

Under this system, the exchange rate is determined by the market forces of supply and demand, and the trend in exchange rate primarily reflects the balance of payments position of the Country.Reasons for depreciation of Pak rupee against US dollar


PKR against USD

During the Fiscal Year (FY) 2023-24, Pakistani Rupee (PKR) has appreciated by 2.7 percent against US Dollar and closed at PKR 278.4047 per USD as on May 16, 2024.

The FY24 started with positive news of Staff Level Agreement (SLA) with the International Monetary Fund (IMF) under a Stand-by Arrangement (SBA) resulting in a wave of positive sentiments and PKR appreciated by 3.8 percent in a single day to close at PKR 275.44/ US$ on July 04, 2023 compared to PKR 285.99/ US$ as of end June 2023.

Currently, the USD PKR exchange rate stands at 278.40 as on May 16, 2024.

Reasons for depreciation of PKR against USD

The depreciation of PKR was due to weak external account position. The current account balance recorded a deficit of US$ 17.5 billion in the FY 2021-22, primarily on account of surge in imports.

The elevated international commodity (including oil) prices, supply disruptions and imports owing to support economic activity have been the major contributors to current account deficit.

Although the Current Account Deficit (CAD) declined in FY23 to US$ 2.2 billion, US monetary tightening (increase in Federal Fund rates from 0.5 percent in March 2022 to 5.25 percent by June 2023), consequent US Dollar’s broad-based strengthening against other currencies, and domestic political uncertainty have added to external sector challenges.

Mati-Ullah is the Online Editor For DND. He is the real man to handle the team around the Country and get news from them and provide to you instantly.

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