The Pak Rupee experienced a notable appreciation of 29 paisas against the US dollar on Wednesday, closing at Rs160.62 in the interbank foreign exchange market. This marked an improvement from the previous day’s closing rate of Rs160.91 to the dollar.
The currency’s positive performance against the dollar was driven by substantial inflows from workers’ remittances and export receipts, which effectively counterbalanced the high demand for dollars typically associated with import payments. Analysts attributed this gain against the dollar to encouraging economic indicators and a current account surplus that contributed to the rupee’s strengthening.
In recent weeks, Pakistan’s liquid foreign exchange reserves have shown a significant uptick. As of October 16, 2020, the reserves surged by $287 million, reaching $19.302 billion, up from $19.015 billion recorded on October 9, 2020. Similarly, the central bank’s official reserves rose by $269 million, totaling $12.067 billion compared to $11.798 billion the previous week. The State Bank of Pakistan (SBP) credited this increase in reserves to government inflows and prudent economic management.
A crucial factor in this positive trend against the dollar has been the robust inflow of workers’ remittances. The SBP reported a remarkable 31.2 percent increase in remittances for September 2020, with inflows reaching $2.3 billion. This figure not only surpassed the same month last year but also exceeded August 2020’s remittance total by 9 percent. It is the fourth consecutive month where remittances have exceeded the $2 billion mark.
The SBP highlighted the sustained strong performance of remittances, stating, “Workers’ remittances remained above $2 billion for the fourth consecutive month in September.” This reflects continued confidence and economic support from Pakistanis working abroad.
On a cumulative basis, remittances for the first quarter of the current fiscal year reached a record $7.1 billion, marking a 31.1 percent increase compared to the same period last year. The September figure exceeded the SBP’s projections of $2 billion, signaling a robust and resilient economic outlook.
Economists and currency experts remain optimistic about the rupee’s future performance, given the current positive economic indicators and substantial financial inflows. As Pakistan continues to manage its foreign exchange reserves effectively, the rupee’s appreciation against the dollar could further stabilize and strengthen in the coming months.