Karachi, February 11, 2025 – The Pakistani rupee made a modest recovery on Tuesday, appreciating by five paisas against the US dollar, supported by strong inflows of workers’ remittances.
The rupee closed at PKR 279.17 per dollar in the interbank market, improving from the previous day’s closing rate of PKR 279.22.
Currency analysts noted that while the rupee had been facing pressure due to persistent dollar demand for imports and corporate payments, the robust inflows of workers’ remittances provided much-needed support. The State Bank of Pakistan (SBP) reported a significant increase of approximately 32% in remittances during the first seven months (July–January) of the fiscal year 2024-25. This surge underscores the crucial role remittances play in stabilizing the rupee by bringing in a steady flow of foreign exchange.
Surge in Workers’ Remittances
During the July–January period, remittances totaled $20.8 billion, a substantial rise from $15.8 billion recorded in the same months of the previous fiscal year. This 31.7% growth highlights the resilience of remittances as a key contributor to foreign currency inflows, reinforcing the rupee’s strength.
Impact of Foreign Reserves on the Rupee
Another positive factor bolstering the rupee is the improvement in Pakistan’s foreign exchange reserves. The SBP reported an increase of $46 million in reserves for the week ending January 31, 2025, bringing total reserves to $11.418 billion. The strengthening of foreign reserves enhances liquidity management by the central bank and helps mitigate exchange rate volatility, further supporting the rupee’s stability.
Exports and the Rupee’s Stability
Market experts suggest that continued foreign inflows and a strong export performance could further boost the rupee. According to the Pakistan Bureau of Statistics (PBS), exports rose by 10% during the first seven months of FY 2024-25, reaching $19.55 billion compared to $17.78 billion in the previous year. This growth plays a pivotal role in narrowing the trade deficit and maintaining the rupee’s strength in the forex market.
Balance of Payments and the Rupee’s Outlook
Additionally, Pakistan’s balance of payments has shown notable improvement. The country recorded a current account surplus of $1.21 billion during the first half of FY 2024-25, a stark contrast to the $1.40 billion deficit observed in the same period last year. This positive shift further reinforces confidence in the rupee’s future stability.