Karachi, September 28, 2023 – The Pakistani Rupee (PKR) concluded the month of September with a triumphant performance, closing at PKR 287.74 against the US dollar on Thursday, marking a significant recovery from its all-time low of PKR 307.10 to the dollar on September 5, 2023.
Over the course of the month, the rupee exhibited a remarkable gain of PKR 19.36, representing a 6.31 percent increase.
On the final trading day of September, the rupee saw a gain of PKR 1.01 against the dollar, compared to the previous day’s closing rate of PKR 288.75 in the interbank foreign exchange market.
Financial experts attribute this strengthening trend to decisive government actions aimed at curbing illegal dollar transactions, currency hoarding, and black market activities. These measures have injected liquidity into the foreign exchange market, encouraging exporters to actively sell dollars and resulting in a surge in daily remittances.
The State Bank of Pakistan played a pivotal role in fostering this positive sentiment by incentivizing remittances through legal channels. Additionally, the central bank’s foreign exchange reserves experienced a modest increase, rising by $56 million to reach $7.7 billion during the week ending September 15.
Despite the 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 caution 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 Pakistani 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.