The State Bank of Pakistan’s foreign exchange reserves have declined below $6 billion as the SBP’s reserves decreased by $294 million to $5.822 billion as of Dec 23, 2022. The decline of forex reserves was expected on account of external debt repayments, it is highly disappointing nevertheless.

The existing balance of forex is not sufficient to foot the bill of even one month’s essential imports.

The smuggling of USD to Afghanistan has increased manifold in recent weeks and months, dealing a severe blow to PKR. USD is said to be freely available for purchase only in the black market where it is traded at Rs 250 and above. Therefore, interbank and open market rates are of no consequence, to say the least. USD seems to have replaced PKR in any of its functions.

The country’s economy appears to be afflicted by the ‘dollarization pandemic’. The PKR is weakening day in, day out.

How ironic it is that even the Afghan traders are asking Pakistani importers of their goods to make payments to them either in USD or UAE Dirham. Finance minister Ishaq Dar is trying harder to inject stability, however modest and incremental, into a beleaguered PKR but his efforts are taking him nowhere because of the deepening economic mess.

Copyright Business Recorder, 2022