Karachi, September 27, 2023 – In a remarkable streak of gains, the Pakistani Rupee (PKR) extended its appreciation against the US dollar for the 16th consecutive session, closing at PKR 288.75 at the interbank foreign exchange market, a significant improvement from the previous day’s closing rate of PKR 289.80.
The rupee had hit an all-time low of PKR 307.10 against the dollar on September 5, 2023, but since then, it has embarked on a record-breaking journey of appreciation, marking a remarkable gain of PKR 18.35, representing a 6 percent surge.
Experts attribute this strengthening trend to the decisive actions taken by the government against illegal dollar transactions, currency hoarding, and black market activities. These measures have injected liquidity into the foreign exchange market, prompting exporters to actively sell dollars and leading to a surge in daily remittances.
The State Bank of Pakistan has played a pivotal role in fostering this positive sentiment by incentivizing remittances through legal channels. Additionally, the central bank’s foreign exchange reserves have witnessed a slight uptick, rising by $56 million to reach $7.7 billion during the week ending September 15.
Despite challenges posed by rising global oil prices, there is optimism that inflation in Pakistan may begin to moderate in the coming months. This positive outlook is bolstered by factors such as currency stability, improved foreign exchange reserves, successful crackdowns on smuggling, and reductions in the prices of essential commodities like wheat and sugar.
Furthermore, the recent announcement by the Election Commission of Pakistan regarding the scheduling of elections for the final week of January 2024 has alleviated concerns of a prolonged delay. This development has led to increased investor confidence and a boost in positive sentiment in financial markets.
However, analysts offer a note of caution, emphasizing that while administrative measures have shown promising results in correcting the Rupee’s course and stabilizing essential goods’ prices, a significant reduction in the high inflation currently experienced by Pakistanis may not be immediate. Rising petrol and energy prices remain substantial contributing factors to inflation.
Most analysts expect the consumer price index inflation for September to remain around 30 percent, with the weekly sensitive price index witnessing three consecutive weeks of gains, potentially affecting the State Bank of Pakistan’s inflation projections.
As the Rupee continues its upward trajectory, the Pakistani economy finds itself navigating a complex landscape of challenges and opportunities, influenced by both domestic and international factors.