Karachi, December 28, 2023 – The Pakistani Rupee (PKR) made a modest gain of PKR 0.27 against the US dollar on Thursday, driven by robust foreign currency demand for imports and corporate payments.
Closing at PKR 281.93 to the dollar in the interbank foreign exchange market, the local currency showcased resilience against the greenback, a noteworthy feat amid recent concerns over Pakistan’s foreign exchange reserves.
These reserves saw a substantial decline of $138 million within a week, reaching $12.068 billion by December 15, 2023, down from $12.206 billion recorded just a week earlier by December 8, 2023. This decline has raised concerns within economic circles, posing a potential threat to the nation’s balance of payment capacity.
Despite these challenges, the economic landscape reveals signs of strength. A key factor contributing to the Rupee’s stability is the significant reduction in the Current Account Deficit (CAD).
From July to November of the fiscal year 2023-24, Pakistan experienced an impressive 64.46 percent reduction in its CAD, totaling $1.16 billion, a stark contrast to the $3.26 billion recorded during the same period in the previous fiscal year.
Analysts attribute this decline to a substantial reduction in the trade deficit, signaling positive trends in the country’s economic performance.
While challenges persist with increased demand for the US dollar, the Rupee’s ability to gain ground against the dollar underscores the intricate interplay of economic factors.
Declining foreign exchange reserves and pressures from external debt repayments remain significant concerns, but positive indicators such as the reduced CAD and a more favorable trade balance indicate a potentially robust economic outlook.
Economic experts and policymakers are closely monitoring these developments, evaluating the impact of external factors on Pakistan’s economic stability.
The Rupee’s resilience in the face of adversity highlights the underlying strengths of the nation’s economic fundamentals, providing a glimmer of hope amid current challenges.
As we approach the end of the year, market observers will keenly watch for further developments in the foreign exchange market and the overall economic situation.
The delicate balance between external pressures and domestic strengths will continue to shape Pakistan’s economic trajectory in the upcoming months.
