The Pakistani rupee is facing a slight depreciation against the US dollar in the lead-up to an International Monetary Fund (IMF) economic review. The currency fell by Rs0.32 to reach Rs279.12 against the US dollar, with fluctuations in the exchange rate over the past week. Previously, the rupee had strengthened by over 11% in six weeks, but it has now faced some pressure.
The pressure on the rupee is due to increased demand for foreign currency to cover imports and repay maturing foreign debt. Supply of foreign currency had outpaced demand recently, but rising global prices of petroleum products and gold, contributing to higher import costs, have slightly tipped the balance.
However, there have been positive developments, such as a reduction in imports, increased remittances from overseas Pakistanis, growth in foreign direct investment, and higher export earnings. This has reduced the current account deficit and boosted the country’s foreign exchange reserves to $7.71 billion, which provided some support to the rupee.
Furthermore, the price of gold in Pakistan increased, partially due to rupee depreciation and a rise in international gold prices. The situation underscores the delicate balance Pakistan faces as it approaches the IMF review, impacting its currency and economic stability.