New Delhi, India

The Pakistani rupee has been falling against the US dollar in the interbank currency market for months. 

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This downward trend is a source of concern for the Imran Khan government because it indicates the country is facing a deeper economic problem, according to local media.

On Friday, the Pakistani rupee closed at 175.73 to the US dollar. Since May 14 and July 1, the rupee has lost 13.34 per cent and 10.35 per cent, respectively. 

Also read | $1=PKR 173: Pakistani rupee hit an all-time low against the US dollar

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The foreign exchange reserves of Pakistan have also decreased to USD 17.3bn from USD 19.2bn in early October. Even the delayed resumption of the IMF loan program is not helping the South Asian nation.

Additionally, so far this year, the Turkish lira has fallen by more than a quarter, making it the worst performer in emerging markets this year. It lost two-thirds of its value in five years, eating into the incomes of Turks along with double-digit inflation. As of Friday (November 12), Turkey's lira reached an all-time low of 9.975 against the US dollar.

Watch | Turkey: Lira depreciation gained pace in last 2 months

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During the past week, Iran's Rial has also declined by another 2.8 per cent, bringing its 6-month loss to 31.5 per cent. After former President Donald Trump's administration left the Joint Comprehensive Plan of Action (JCPOA), Iran's economy has suffered.

Pakistani rupee has been declining against the US dollar despite the State Bank of Pakistan's restrictions on imports and its purchase of greenbacks on the open market.

According to Dawn, since no help from anywhere has been forthcoming, the rupee's downward trajectory is unlikely to reverse in the near future. A deal with the IMF is crucial in order to raise dollars through the international bond markets.

The government will continue to have to rely on remittances to meet its current account deficit and slow down the haemorrhaging of reserves built through past borrowing until fresh (borrowed) dollars arrive from somewhere.

Also read | Iran sets date to resume talks on nuclear deal after five-month gap

In normal circumstances, currency depreciation is nothing to worry about. Due to high inflation and other economic factors, currencies are constantly adjusting their prices downwards.

This helps a country's exports remain competitive on international markets, increases domestic production, and stimulates economic growth.

However, a steep fall in a currency's value, such as the Pakistani rupee's of late, reveals far deeper economic problems: low productivity, limited export options, high import dependence, rapid/galloping price inflation, etc.

Exchange rates are a country's first line of defence against external shocks, and how long they can hold up under relentless pressure is uncertain.