KARACHI – The Pakistani Rupee strengthened against the US Dollar on Monday, gaining 18 paisas. The improved economic indicators and reduced demand for import payments were cited as contributing factors to the rupee’s resurgence.
The interbank foreign exchange market witnessed the rupee closing at Rs158.91 to the dollar, a welcome shift from last Friday’s closing rate of Rs159.09.
Dealers in the foreign exchange market highlighted that the positive momentum in the Pakistani Rupee was propelled by encouraging economic indicators. However, they also noted that importers exhibited caution in purchasing goods from foreign suppliers, a trend attributed to concerns related to the ongoing second wave of the COVID-19 pandemic.
The all-time low for the rupee was recorded at Rs168 on August 26, 2020, marking a challenging period for the Pakistani currency. The recent recovery signals a positive development, reflecting the resilience of the rupee in the face of economic uncertainties.
The Pakistan Bureau of Statistics (PBS) provided additional insights into the economic landscape, reporting that exports for the month of October 2020 increased by 3.07 percent, reaching $2.08 billion compared to $2.02 billion in the same month the previous year. In contrast, imports during the same period declined by 5.73 percent, amounting to $3.82 billion compared to $4.05 billion in October of the preceding year.
The reduction in imports contributed to a significant narrowing of the trade deficit, which decreased by 14.46 percent to $1.74 billion in October 2020 compared to a trade deficit of $2.03 billion in the corresponding month of the previous year. This decline in the trade deficit is indicative of a more balanced trade scenario, with positive implications for the overall economic outlook.
The cautious approach adopted by importers aligns with global economic uncertainties stemming from the persistent challenges posed by the second wave of the COVID-19 pandemic. The pandemic has had profound implications on international trade, and businesses worldwide have been adjusting their strategies to navigate through the evolving situation.
As Pakistan continues its efforts to revive economic activities and mitigate the impact of the pandemic, the positive indicators in the export sector and the reduced trade deficit represent promising signs. The ability of the rupee to recover ground against the dollar underscores the resilience and adaptability of the Pakistani economy.
Market participants and policymakers will likely closely monitor these trends, seeking opportunities to sustain economic recovery and ensure the stability of the currency. The collaboration between public health measures and economic policies remains crucial in navigating the challenges posed by the ongoing global health crisis.
