Karachi, August 28, 2024 – The US dollar gained ground against the Pakistani rupee on Wednesday, making a notable comeback in the interbank foreign exchange market with a 13 paisas increase. The rupee’s value depreciated, closing at PKR 278.45 per dollar, down from the previous day’s closing of PKR 278.32.
Financial analysts have attributed this rise in the dollar’s value to a surge in import payment demand. The pressure from importers to meet payment obligations led to increased demand for the greenback, resulting in the depreciation of the rupee. Additionally, there are concerns over external debt repayments by the government, which further fueled the dollar’s appreciation.
Despite this uptick, analysts remain optimistic about the rupee’s performance in the near future. They expect the currency to remain stable due to an improvement in Pakistan’s foreign exchange reserves and a narrowing current account deficit. This sentiment is supported by recent data from the State Bank of Pakistan (SBP), which shows a slight increase in foreign exchange reserves.
As of August 16, 2024, the SBP reported that the country’s foreign exchange reserves stood at $14.67 billion, up by $22 million from the previous week’s reserves of $14.645 billion on August 9, 2024. This growth in reserves was largely driven by improved export receipts and stronger remittances from overseas Pakistanis, which have been instrumental in bolstering the balance of payments and providing essential support to the rupee.
Breaking down the figures, the SBP’s own foreign exchange reserves saw an increase of $19 million, bringing the total to $9.292 billion as of August 16, 2024, compared to $9.273 billion the previous week. Similarly, reserves held by commercial banks experienced a modest rise, increasing by $3 million to end the week at $5.375 billion, up from $5.372 billion a week earlier.
Market participants believe that the rupee will likely maintain its current level in the coming days due to these positive trends in the balance of payments. The slight boost in foreign reserves and the narrowing current account deficit are expected to provide a cushion against any significant depreciation pressures. However, they also caution that any unforeseen external shocks or policy changes could still impact the currency’s stability.
As the global economic environment remains uncertain, particularly with regard to the US Federal Reserve’s policy stance and geopolitical developments, market watchers will closely monitor these factors for any potential impact on the rupee’s future trajectory against the dollar.
