Karachi, 6th February 2024 – The Pakistani Rupee (PKR) saw a marginal decline, closing at PKR 279.42 against the US dollar in the interbank foreign exchange market on Tuesday.
The slight decrease of PKR 0.01 compared to the previous day’s closing at PKR 279.41 was primarily due to reduced demand for imports and corporate transactions. This trend contributed significantly to maintaining stability in the currency despite economic uncertainties.
Experts in the currency market emphasized the resilience of the local unit against the dollar, even amidst a decline in foreign exchange reserves. Lower import demands and corporate transactions played a pivotal role in bolstering the rupee amid economic challenges.
Pakistan faces economic concerns, evidenced by official data from the State Bank of Pakistan (SBP) revealing a notable $78 million decrease in weekly foreign exchange reserves. Figures released on Thursday indicate a drop from $13.341 billion to $13.263 billion for the week ending January 26, 2024, raising apprehensions among economic analysts and policymakers.
However, despite the decline in reserves, the Pakistani currency has shown resilience, attributed to various factors. Notably, the infusion of funds, including a substantial $700 million from the International Monetary Fund (IMF), has significantly enhanced the country’s balance of payments and stabilized the exchange rate.
Effective fiscal strategies and a favorable trade balance have further contributed to the Rupee’s stability. The first half of fiscal year 2023-24 witnessed a significant 16.28 percent reduction in the import bill, dropping from $31.21 billion to $26.13 billion.
In contrast, exports experienced a commendable 5.17 percent increase, reaching $14.98 billion. Consequently, this led to a notable 34.79 percent contraction in the trade deficit, falling from $16.96 billion to $11.15 billion during the same period.
The injection of funds, along with prudent fiscal policies and a positive trade balance, has provided stability to the Pakistani Rupee amidst declining foreign exchange reserves.
Nevertheless, economists and policymakers are closely monitoring the situation, recognizing the challenges posed by economic setbacks and emphasizing the need for sustainable strategies to ensure long-term currency and economic stability.
