Travelers who need to change Pak rupees to U.S. dollars any time soon may be in for a rude awakening today and this weekend. The USD vs PKR exchange rate hit a new record this week following a brief rally around the end of Ramadan.
USD vs PKR hits new record
At the time of this writing, it takes 156 Pak rupees for 1 USD. The South Asian nation’s currency hit a record high exchange rate against the dollar at Rs157 per US$1 this week, and the depreciation is expected to continue for some time. The Pakistani rupee has depreciated by 4.10 against the U.S. dollar since Thursday’s close of market. Just in the last five days, the currency has declined 7.70 vs. the U.S. dollar, and market watchers expect the depreciation to continue for the near future.
The rupee has dropped off significantly vs. the U.S. dollar over the last year and a half. The currency moved to 110 Pak rupees to U.S. dollars in December 2010 but has depreciated by more than 40% since then.
Some analysts now look for the USD vs PKR exchange rate to stabilize at 160 to 165 rupees against the U.S. dollar. However, others have warned that the exchange could reach 200 Pak rupees to 1 US dollar by the end of the year.
Pakistan’s financial and economic woes continue
Analysts had been predicting that the Pak rupee would be allowed to be devalued in the wake of the latest bailout package from the International Monetary Fund. The South Asian nation has been teetering on the edge amid long-running budget problems. The State Bank of Pakistan said on Thursday that its foreign currency reserves were down $55 million to $7.81 billion after payments for external debt servicing.
Export and import levels remain very uneven after the extended Eid holidays, senior economist Muzzammil Aslam told the Khaleej Times. He said the import backlog reached a high level during the holiday with more than $1 billion in queue to be cleared. Remittance flows fell back off following the Eid holidays, he added. He also said Pakistan’s central bank declined to intervene in the situation, further weakening the Pak rupee against the dollar. He describes the adjustment as “trade-related.”