The Pakistani rupee (PKR) is poised to conclude the year as Asia’s weakestcurrency, and projections suggest ongoing depreciation in 2024, with BMIResearch anticipating a drop to 350 PKR per USD by the end of the followingyear.
Throughout the year, the currency has experienced a substantial decline of20.73 percent or 59.21 rupees against the US Dollar, and analysts predictpersistent challenges ahead, as reported by Bloomberg.
John Ashbourne, a global economist at BMI in London, a Fitch Solutionscompany, commented on the situation, stating, “This looks like a currencythat is set to adjust downwards,” citing factors such as Pakistan’s highinflation and trade deficit exerting pressure on the rupee.
The weight on the rupee is further exacerbated by Pakistan’s high debtpayments and an external funding gap. The country faced the risk of defaultthis year, and reduced foreign investments, coupled with Asia’s rapidinflation, are contributing to its economic difficulties, as noted byBloomberg.
Despite the International Monetary Fund’s recent approval of a $700 millionpayout, providing temporary relief from default, concerns persist thatchallenges may extend into 2024, necessitating additional aid forPakistan’s fragile economy.
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The looming threat of a dollar shortage could result in the resurgence ofparallel currency markets, which emerged last year when the central bankrestricted access to foreign currency in a bid to safeguard dwindlingreserves.
In September, as the rupee reached a historic low, the governmentintensified efforts to curb illegal buying and selling of the dollar at apremium to the official exchange rate, but the subsequent gains appear tobe short-lived.