Karachi, July 23, 2024 – The Pakistani Rupee saw a decline of 11 paisas against the US dollar on Tuesday, closing at PKR 278.41 in the interbank foreign exchange market.
This depreciation brought the rupee down from the previous day’s closing of PKR 278.30 against the dollar.
Currency analysts attributed the fall in rupee value to mounting dollar demand for imports and corporate payments. The increased economic growth has led to heightened pressure for imported raw materials and finished products, adding strain on the rupee. Analysts predict that this pressure will persist in the coming days due to continued import-related outflows.
Despite the current pressure, currency experts maintain a stable outlook for the rupee. This optimism is bolstered by improved foreign exchange reserves and anticipated inflows from the International Monetary Fund (IMF). The State Bank of Pakistan (SBP) reported a weekly increase in the country’s foreign exchange reserves by $59 million. As of the week ending July 12, 2024, forex reserves climbed to $14.704 billion, up from $14.645 billion the previous week on July 5, 2024.
The SBP highlighted that its official reserves rose by $19 million, reaching $9.424 billion as of July 12, compared to $9.405 billion the previous week. Additionally, foreign exchange reserves held by commercial banks saw a significant rise of $40 million, totaling $5.28 billion, up from $5.24 billion during the same period.
This positive development follows Pakistan’s recent staff-level agreement with the IMF for a $7 billion Extended Fund Facility (EFF). While the IMF’s executive board still needs to approve the disbursement of the loan, the anticipation of these funds has already positively influenced market sentiment.
Financial markets are closely watching the rupee’s performance, especially in light of the upcoming IMF disbursements. The central bank’s increased reserves and the potential inflow from the IMF are seen as key factors that could stabilize the currency in the near term.
Market analysts believe that if the IMF board approves the loan, it will provide much-needed support to Pakistan’s economy, helping to stabilize the rupee further. They emphasize that maintaining higher foreign exchange reserves is crucial for sustaining market confidence and ensuring smooth import operations.
While the Pakistani Rupee experienced a slight depreciation against the US dollar, the broader economic indicators suggest potential stability. The ongoing improvements in foreign exchange reserves and anticipated IMF inflows offer a glimmer of hope for the rupee’s performance in the coming months. The financial community remains cautiously optimistic, keeping a close watch on the developments that could influence the currency’s future trajectory.