Karachi, January 26, 2024 – The Pakistani Rupee (PKR) wrapped up the week on a positive note, closing at a stronger position of PKR 279.59 against the US dollar, marking 8 paisas gain from the previous day’s closing rate of PKR 279.67.
This upward trend in the exchange rate is attributed to a combination of factors contributing to an improved balance of payments in the country. Key among these factors is the injection of funds from international sources, notably a substantial $700 million from the International Monetary Fund (IMF).
This financial boost, coupled with robust fiscal policies, has played a pivotal role in stabilizing the Pakistani currency amidst uncertainties in the global economic landscape.
A notable outcome of these developments is the significant surge in Pakistan’s foreign exchange reserves. According to the State Bank of Pakistan (SBP), reserves witnessed an impressive increase of $36 million, reaching $13.257 billion by the week ending January 5, 2024, compared to $13.221 billion recorded on December 29, 2023.
While this increase in reserves is undoubtedly positive, analysts emphasize the need for a comprehensive perspective. Despite the improvement, reserves still lag behind the levels observed in August 2021, underscoring the importance of continued scrutiny of Pakistan’s reserves to understand the factors influencing this positive trend.
Experts attribute the strengthening of the Rupee to several factors, including a narrowing trade deficit and a decline in the import bill. In the first half of fiscal year 2023-24 (July – December), the import bill experienced a substantial decrease of 16.28 percent, dropping from $31.21 billion to $26.13 billion.
In contrast, the country saw positive growth in exports, with a commendable increase of 5.17 percent during the same period, reaching $14.98 billion.
This surge in exports, coupled with a contraction of the trade deficit by 34.79 percent, from $16.96 billion to $11.15 billion in the first half of fiscal year 2023-24, contributes to the overall robust economic performance for Pakistan.
The combination of increased foreign exchange reserves, a shrinking trade deficit, and a reduced import bill instills confidence in the financial markets.
Currency experts anticipate that ongoing prudent fiscal policies and effective management of external balances will be crucial in maintaining the positive momentum of the Pakistani Rupee against the US dollar in the upcoming months.
As Pakistan navigates the global economic landscape, these indicators present an optimistic outlook for the nation’s economic stability and resilience, showcasing the effectiveness of both recent international financial support and domestic economic measures. Investors and analysts are closely monitoring this trajectory, optimistic about the continued upward trajectory of Pakistan’s economic progress.
