ISLAMABAD — Pakistan finds itself once again caught in the crosshairs of a deepening foreign exchange crisis, as commercial banks delay import payments and the rupee comes under renewed pressure, as reported by The Express Tribune. The delays—ranging from two to three weeks for open-account and contract-based imports—stem from a dollar shortage triggered by looming debt repayments and strict reserve targets set by the International Monetary Fund (IMF).
Banking insiders reveal that some institutions are rationing dollars, even charging above the interbank rate for clearing Letters of Credit (LCs), a signal of tightening market conditions. The gap between the interbank and open market rates has widened, with the dollar trading above Rs282 in the interbank and nearing Rs285 in open markets.
At the core of this growing strain lies Pakistan’s $2.4 billion repayment due to China in June, coupled with additional payments to multilateral lenders. Foreign exchange reserves hover at just $11.5 billion—insufficient to cover obligations and still retain a stable reserve floor. The IMF has also adjusted the June-end Net International Reserves (NIR) target to negative $7.5 billion, increasing pressure on the central bank to build buffers.
Ironically, to meet these very targets, the State Bank of Pakistan (SBP) has continued purchasing dollars from the local market, further squeezing supply for commercial transactions. Sources say exporters and remitters are generating enough foreign currency to cover imports, but the financial account—particularly debt servicing—is pushing the rupee downward.
Adding to the strain are major state-owned enterprises like Pakistan State Oil (PSO) and Pak Arab Refinery Limited (PARCO), both struggling to secure dollars at competitive rates. PSO reportedly paid nearly Rs3 more per dollar in a recent transaction, a cost likely to be passed on to consumers through higher fuel prices.
Despite being under an IMF program, Pakistan has not received expected inflows from foreign lenders or “friendly countries,” raising concerns about over-reliance on short-term rollovers and domestic dollar buying to maintain an artificial sense of stability.
A senior banker cautioned that while the situation isn’t as dire as the 2022 liquidity crunch, the central bank must ease its dollar purchases temporarily to stabilize the market and prevent speculative pressure. Market players also warn that tight exchange rate controls may be hurting exporters, reducing competitiveness just when foreign inflows are desperately needed.
As the Hajj-related seasonal dollar demand fades, some officials anticipate relief. But without renewed external support and a coherent strategy, Pakistan’s balancing act between IMF targets and foreign currency shortages remains fragile—and dangerously exposed.
