Karachi, December 14, 2023 – The Pakistani Rupee strengthened by 10 paisas against the US Dollar on Thursday, closing at PKR 283.51 in the interbank foreign exchange market.
This marks a gain from the previous day’s closing of PKR 283.61. Analysts attribute this surge to the stable monetary policy upheld by the State Bank of Pakistan (SBP), maintaining the benchmark policy rate at 22 percent.
The introduction of Sharia-compliant bonds in the stock market is also identified as a contributing factor to the Rupee’s upward trend.
The currency market has responded positively, reflecting increased confidence in the local currency. However, concerns linger regarding a notable decline in the country’s foreign exchange reserves, as highlighted by the SBP.
Despite recent gains, the SBP reports a substantial drop in foreign exchange reserves, decreasing from $12.373 billion on November 24, 2023, to $12.107 billion by December 1, 2023.
This decline is particularly significant when compared to the peak levels in August 2021 when reserves stood at $27.2 billion.
Currency analysts stress the pivotal role foreign exchange reserves play in maintaining currency stability and meeting international financial commitments.
The decline may be attributed to factors like increased imports, debt repayments, and external financial pressures. Addressing these issues is crucial for the country’s economic stability.
While positive economic indicators have contributed to the Rupee’s recent gains, the decline in foreign exchange reserves poses a persistent threat. Urgent and effective measures are needed from the government and financial authorities to stabilize the situation.
Experts advocate for a comprehensive strategy, focusing on boosting exports, attracting foreign investments, and reducing the trade deficit.
The government’s exploration of these avenues, along with vigilant monitoring of economic indicators, is essential to restore investor confidence and ensure long-term stability in Pakistan’s currency markets.
In the face of evolving global economic landscapes, it becomes imperative for countries like Pakistan to adopt sound economic policies to navigate challenges and fortify the resilience of their economies.
