In 2023, the Pakistani Rupee has underperformed the Sri Lankan Rupee.

The Pakistani Rupee (PKR), which has lost 21.1 percent of its value against the US dollar so far in 2023 and appears to be on its path to falling below 300 soon, has declined while the government continues to put its faith in the International Monetary Fund (IMF) for recovery.

The Sri Lankan Rupee (LKR) was trading at 318.8 against the US dollar on Monday, having risen significantly from its low of 360 last year as macroeconomic indicators improved. According to information provided by Topline Securities, the LKR has increased in value against the US dollar by 15.2% in 2023.


An IMF-approved $3 billion bailout for Sri Lanka was granted in March. The deal, which has been in the works for about a year, is now saving the nation and boosting the economy. The Central Bank of Sri Lanka has soft-pegged forex rates at a middle rate and established a range to permit buying and selling in order to gradually increase the exchange rate to moderate levels.

Recall that due to a severe lack of foreign exchange reserves, the Sri Lankan rupee plummeted from 200 to 360 per dollar last year, or over 80%. The LKR is now trading in the 315-320 range as of April 7th, 2023.

In contrast, the PKR has been falling since the spring of 2022, losing more than Rs. 104 from 182.93 on April 11, 2022, to 287.09 today. It appears likely to break through 300 in the upcoming months and continue to fall against the dollar to levels that could be worse than the LKR. The shift of the exchange rate has been unexpected for a country that hasn’t even declared default yet.

The LKR will probably continue to rise as more dollar assets enter Sri Lanka’s reserves as officials concentrate on further financial sector liberalisation and closer economic integration with the rest of the world.

The IMF’s more optimistic economic projections for the nation in 2023 are the main factor driving the LKR because the post-default response will result in an all-year economic recovery. Further analysis predicts that by year’s end, the LKR will stabilise against the US dollar in the 290-280 range. With an economy that is progressively expanding behind it, it might become even firmer.

Meanwhile, due to dismal macroeconomic data and a severely stalled economy, the PKR may continue to decline.

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