Pakistani exporters, spooked by potential devaluation of the US dollar, are selling their dollar earnings in large quantities, leading to a surge of US dollars in local banks. This influx is pressuring the Rupee (PKR) and leading currency dealers to predict a further weakening of the dollar.
Dawn reports the dollar has already depreciated by Rs. 3 against the PKR in the interbank market over the past three months. Forward premiums, reflecting expectations of future exchange rates, have also plunged over 50%, reflecting doubts about the dollar’s stability.
The government is taking steps to stabilize the dollar/PKR rate and support exporters. Meanwhile, importers are buying dollars with adjusted premiums for up to six months to manage future costs. However, banks, following central bank regulations, only provide dollars to importers with sufficient funds, aiming for financial stability amidst currency fluctuations.
Despite a recent $19 million increase in forex reserves to $8.04 billion (attributed to the central bank’s dollar purchases), importers remain unhappy with the State Bank of Pakistan’s (SBP) restrictions. The SBP expects a $1.1 billion inflow from the IMF this month, which should offset a $1 billion Eurobond payment due in mid-April.
These developments showcase the complexities of currency markets and financial stability. Pakistan is navigating exchange rate fluctuations and working to ensure economic resilience.