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Pakistan’s Forex Reserves Left For 3 Weeks, Another Crisis In South Asia Awaits

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Last Updated: January 10, 2023, 11:21 IST

The official exchange price of US Dollars is PKR226 for 1 US Dollar.

The official exchange price of US Dollars is PKR226 for 1 US Dollar.

The reported figures are eight-year low for the country, further, Pakistan could float import tenders for the next 3 weeks only.

Another crisis in South Asia awaits as Pakistan’s forex reserves are declining. The Central Bank of Pakistan reported that the country’s foreign reserves have dipped to $5.8 billion. The reported figures are an eight-year low for the country. Further, Pakistan could float import tenders for the next 3 weeks only. As per the World Bank, Pakistan’s foreign debt was $130.433 billion by 2021. Hence, the bleak state of Pakistan’s economy persists even after the IMF’s bailout.

Pakistan’s Finance Minister Ishaq Dar states otherwise and points out that their nation would not default and blames the Imran Khan-led government. The excerpt read, “We’re in a tight position. We don’t have USD 24bn in foreign exchange reserves that our (last) government left in 2016. But that’s not my fault. It’s the system’s fault.” However, foreign economists were quick to observe that Pakistan is inching closer to default. This is in stark contrast to what minister Ishaq Dar stated.

Economist points out that Pakistan’s foreign reserves have fallen persistently since the beginning of FY23 and the inflows have been too little to fund the expenses. The Imran Khan-led government left the forex reserves at $10.5 billion before he was ousted in April following a no-confidence vote. Moreover, the US Dollar is sold at PKR260 and PKR270 in the illegal grey market.

The official exchange price of US Dollars is PKR226 for 1 US Dollar. The grey marketers are profiting because of the unavailability of the US Dollar in the open markets. Hence such illegal trading affects the remittances coming from Pakistan’s banking system as banks observe a declining trend concerning remittances.

As reported by Dawn, the nation is losing close to $300 million in remittances every month. The bankers fear that this money is being rerouted to the illegal grey market. They fear that if this trend continues the nation stands to lose close to $4 billion at the end of the current fiscal FY23. Pakistan’s gloomy economy is credited to floods and economic mismanagement by both governments.

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