On Friday, the Pakistani Rupee (PKR) strengthened by 23 paisas against the US dollar, closing at PKR 283.59 compared to the previous day’s rate of PKR 283.82.
This was attributed to a decrease in demand for dollars for import payments and a positive market sentiment due to a significant decline in the country’s import bill.
READ MORE: Rupee makes slight gain against the US dollar to end at PKR 383.82
During the first ten months of fiscal year 2022-2023, Pakistan’s import bill decreased by over 28 percent, leading to a contraction of the trade deficit by approximately 40 percent during the same period.
The reduction in the import bill was a result of government efforts to control non-essential imports, increase exports, and promote domestic production, reducing the country’s dependence on imports and saving foreign exchange reserves.
READ MORE: Dollar eases to PKR 283.88 at interbank closing on May 3, 2023
Despite these positive developments, concerns persist among investors due to obstacles in the IMF loan program and ongoing political uncertainty surrounding election date issues and conflicts between parliament and the Supreme Court.
While recent current account surpluses have provided some relief, worries remain over declining remittances and foreign exchange reserves. Positive developments, such as IMF assurances, funding commitments from Saudi Arabia and the UAE, and the ease of import and corporate payments ahead of Eid holidays, have eased some concerns.
READ MORE: Dollar rebounds to PKR 283.92 at interbank closing on May 2, 2023
In conclusion, the PKR’s slight upward trend against the US dollar is a positive development, primarily due to the decline in the import bill.
However, ongoing political and economic challenges have put pressure on the exchange rate, and the government must continue its efforts to maintain a sustainable trade balance, resolve political conflicts, and secure financial assistance and support from international organizations and friendly countries.
READ MORE: PKR makes gain against dollar amid easing political tension
