The Pakistani rupee has been struggling against the UAE dirham, reaching a nearly three-month low due to a combination of political and economic uncertainty, dwindling foreign exchange reserves, decreasing remittances, and a high trade deficit.
The rupee is currently at around Rs. 62 against the UAE dirham, with online foreign exchange website XE quoting it at Rs. 62.29, marking a decline from its value in October 2022. It is worth noting that it is approaching its all-time low of Rs. 65.3, which it reached in September 2022.
The State Bank of Pakistan’s (SBP) recent data revealed that remittances dropped 3.2% month-on-month (MoM) and 19% year-on-year (YoY) to $2 billion in December 2022. This decline is evident in the first half of the 2022-23 fiscal year, with remittances totaling $14.1 billion, a decrease of 11.1% compared to the same period last year.
Additionally, Pakistan’s trade deficit for July-December 2022 stood at $17.13 billion, compared to $25.43 billion in the same period last year.
It is imperative for Pakistan to address the underlying issues that are causing this decline in the rupee value. This includes implementing economic reforms, addressing political turmoil, and increasing foreign investment.
