The article highlights concerns about the stability of the Pakistani rupee against the US dollar

due to various economic factors. It mentions that the State Bank of Pakistan lacks sufficient
foreign exchange reserves, making the rupee vulnerable to fluctuations in demand for the dollar.
Despite efforts to stabilize the exchange rate, challenges such as external debt servicing, trade
deficits, and political instability pose significant hurdles. The incoming coalition government
faces pressure to address these issues, including trade deficits and attracting foreign investment,
especially from the Gulf Cooperation Council (GCC) and Western countries. However,
uncertainties regarding geopolitical positioning and the need for IMF assistance complicate the
situation. The article emphasizes the importance of restoring political stability to attract foreign
investment and address Pakistan's external economic challenges effectively.
The factors mentioned in the article that contribute to concerns about the stability of the
Pakistani rupee and the broader economic challenges include:
1. Insufficient Foreign Exchange Reserves: The State Bank of Pakistan (SBP) lacks
enough foreign exchange reserves to cover even two months of import bills, making the
rupee vulnerable to fluctuations in demand for the US dollar.
2. Trade Deficits: Pakistan has been experiencing significant trade deficits, with imports
outweighing exports by a substantial margin. This puts pressure on foreign exchange
reserves and the value of the rupee.
3. External Debt Servicing: Pakistan faces challenges in servicing its external debt,
including both principal repayments and interest payments. This further strains foreign
exchange reserves and adds pressure on the exchange rate.
4. Political Instability: Political polarization, ongoing protests, and concerns about election
integrity contribute to an unstable political environment. Political stability is seen as
essential for attracting foreign investment and implementing effective economic policies.
5. Need for Foreign Investment: Pakistan requires significant foreign investment to
address its external financing gap and support economic growth. However, attracting
foreign investment is hindered by geopolitical uncertainties and the country's perceived
stability.
6. Geopolitical Dynamics: Pakistan's positioning and posturing in geopolitics, particularly
in relation to Western countries and the Gulf Cooperation Council (GCC), affect its
ability to attract foreign investment and navigate international relations effectively.
7. IMF Assistance: The article suggests that engaging with the International Monetary
Fund (IMF) may be necessary to address Pakistan's economic challenges, including the
external financing gap and debt servicing requirements. However, negotiations with the
IMF could also impact investor confidence and exchange rate stability.
Overall, these factors contribute to concerns about the stability of the Pakistani rupee and
highlight the broader economic challenges facing the country