The Pakistani rupee has experienced significant devaluation against the US dollar in recent months, driven by economic, political, and external financial pressures.
As of late 2024, the currency has reached an exchange rate nearing PKR 325/USD in open markets, reflecting a sharp decline from previous values.
Analysts attribute this decline to high external debt obligations, dwindling foreign reserves, and monetary policy challenges. This devaluation has profound implications for the lives of ordinary citizens in Pakistan
Persistent inflation, which has exceeded 28% on average this fiscal year, continues to erode the rupee’s purchasing power. Rising energy prices and structural inefficiencies in the economy largely drive this inflation
The weakening rupee has created a ripple effect across various sectors:
- Imports: Higher costs of imported goods, especially oil, have raised transportation and energy prices, which directly impact consumer goods.
- Business Sector: Companies relying on imported raw materials face higher production costs, leading to reduced profit margins and increased prices for consumers.
- Investors: Stock market investors are cautious, with many focusing on dollar-backed investments as safer options amid the rupee’s volatility.
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