Steep fall in Pakistani rupee against US dollar reveals deeper economic problems: Report
Nov 15, 2021
Islamabad [Pakistan], November 15 : Pakistan rupee has recorded a fall against the US dollar in the inter-bank currency market for months, a rising concern for the Imran Khan government indicating that the country is facing a deeper economic problem, reported local media.
Currency depreciation is not something to be worried about, in normal conditions. Currencies constantly adjust their price downwards in response to high inflation and other economic factors, reported Dawn.
This helps a country's exports stay competitive in international markets, boosts domestic productivity and grows the economy. But such a steep fall in the value of a currency as witnessed in the case of the rupee of late, reveals far deeper economic problems: low productivity, narrow export range, high import dependency, galloping price inflation etc, the newspaper added.
The Pakistani rupee on Friday closed at an all-time low of 175.73 to a US dollar. The rupee has lost 13.34 per cent and 10.35 per cent since May 14 and July 1, respectively.
Despite the State Bank of Pakistan's curbs on imports and the purchase of the greenback from the open market, the rupee has been declining against the US dollar.
Even the delays IMF loan programme's resumption is not helping the nation.
Pakistan's foreign exchange reserves have also declined to USD 17.3bn from USD 19.2bn in early October.
According to Dawn, with no signs of help from anywhere, the rupee's downward trajectory is unlikely to reverse for now. Plans to fetch dollars from the international bond markets hinge on its ability to strike a deal with the IMF. Until (borrowed) dollars arrive from somewhere, the government will continue to depend on remittances to meet its current account deficit and slow down the pace of the haemorrhaging of reserves built through past borrowings.
The country's exchange rate is the first line of defence against the external shocks and for how long it can sustain against the relentless pressure on it is uncertain.
