Pakistan rupee depreciates more than 3% in March alone, forex reserves at the lowest level since 2020

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<strong>The ongoing political uncertainty in Pakistan with the country’s Prime Minister Imran Khan dissolving Parliament on Sunday and calling for early elections has already started impacting the Covid 19-hit economy. The Pakistani rupee has depreciated steadily in the last one month. At present, the rupee is pegged at about 184 to a US dollar. In March alone, the value of the rupee has eroded by 3.2 per cent.</strong></p>
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In July last year—the beginning of the Pakistani financial year, the country’s currency was pegged at around 158 to the US dollar. A depreciation of the currency would mean that the country’s import bill will rise, especially at a time when global crude prices have surged following the Russia-Ukraine conflict.</p>
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“Structurally, the rupee’s humiliation is due to growing external indebtedness — the PTI government added $20 billion to the stock of the external debt,” Karachi-based <a href="https://www.dawn.com/news/1683318/economy-growing-amidst-challenges">Dawn</a> said.</p>
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Besides petroleum products, Pakistan imports a large chunk of its total requirements of edible oil, including palm, soyabean and olive from countries such as Malaysia, Indonesia and Brazil among others.</p>
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<strong>Also read: <a href="https://www.indianarrative.com/world-news/imran-khan-is-no-longer-the-prime-minister-says-pakistan-s-cabinet-but-supreme-court-will-take-the-final-call-tomorrow-161823.html">Imran Khan is no longer the Prime Minister says Pakistan’s Cabinet, but Supreme Court will take the final call</a></strong></p>
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The country’s foreign exchange reserves have also fallen in March, as Islamabad repaid a chunk of external debt, which includes a syndicated loan facility from China. According to the <a href="https://www.sbp.org.pk/ecodata/forex.pdf">SBP data</a>, the foreign exchange reserves as on March 25 was at $18.554 billion — the lowest since October, 2020. In the beginning of March Pakistan’s forex reserves stood at $22.668 billion while in July it was $24.776 billion.</p>
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A foreign policy analyst told India Narrative that the rise in political uncertainty will continue to put pressure on the country’s currency, which could even depreciate further in the coming days.</p>
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“Such instability, naturally, will have a direct impact on the economy, the currency will be hit immediately..we are seeing that happening already and the trend may even continue for sometime,” the analyst said.</p>
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Depreciation in the currency along with the surge in global oil prices have pushed inflation.</p>
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The International Monetary Fund, which approved disbursement of $1 billion under its $6 billion loan programme, has expressed concern over policy continuity in Pakistan. The Moody’s Investor Service termed the uncertainty as credit negative.</p>