Karachi, November 15, 2024 – The Pakistani rupee continued its upward momentum, closing at PKR 277.67 against the US dollar in the interbank market on Friday. This marks a modest appreciation of 7 paisas from the previous day’s rate of PKR 277.74.
The rupee’s steady performance is attributed to increasing remittance inflows and stable export earnings, which have bolstered the currency despite external economic pressures.
Remittance Surge Bolsters Currency Stability
A significant driver of the rupee’s resilience is the robust growth in remittances from overseas Pakistanis. The State Bank of Pakistan (SBP) reported a 35% year-on-year rise in remittances during the first four months of FY25 (July-October), reaching $11.85 billion compared to $8.79 billion in the same period last year.
This surge underscores the pivotal role of remittances in shoring up Pakistan’s foreign exchange reserves and mitigating market volatility. The inflows provide much-needed support to the currency, reflecting the confidence of overseas Pakistanis in contributing to the national economy.
Forex Reserves See Marginal Uptick
The SBP’s latest report shows an $84 million increase in official foreign exchange reserves, which now stand at $11.257 billion. This modest rise from $11.175 billion the previous week indicates incremental progress in stabilizing Pakistan’s external position. However, global economic volatility continues to pose challenges to sustained reserve accumulation.
Export Performance A Key Factor
In addition to remittances, steady export performance has also played a critical role in supporting the rupee. Analysts credit strong export receipts as a vital component in maintaining currency stability, complementing the inflow of foreign funds from remittances.
Outlook and Challenges
While the rupee recent gains offer a glimmer of optimism, experts advise caution. The currency’s stability hinges on the sustained growth of remittance inflows and export receipts. Any external shocks, such as fluctuating global commodity prices or geopolitical tensions, could dampen this progress.
Nonetheless, the government’s focus on enhancing export competitiveness and prudent reserve management signals its commitment to mitigating risks and fostering economic resilience.
As Pakistan navigates a complex economic landscape, the rupee’s trajectory will likely remain closely tied to global conditions and domestic economic policies.
