Karachi, September 11, 2024 – The Pakistani Rupee (PKR) strengthened by 8 paisas against the US dollar on Wednesday, closing at PKR 278.54 in the interbank market, a slight improvement from the previous day’s closing rate of PKR 278.62.
This gain is primarily attributed to a sharp decline in global oil prices over the past two days.
According to currency analysts, the recent fall in international oil prices has been a significant factor in the rupee’s appreciation. Pakistan, being a net importer of petroleum products, relies heavily on international markets to meet its domestic energy demand. The reduction in global oil prices has eased pressure on the country’s oil import bill, which in turn has reduced the demand for dollars, providing support to the rupee.
The analysts further stated that the Pakistani rupee might continue to maintain its position, citing other positive developments in the country’s economy. These include an uptick in foreign exchange reserves and improved export receipts, both of which contribute to stabilizing the currency.
According to a report issued by the State Bank of Pakistan (SBP), the country’s foreign exchange reserves saw a modest increase of $34 million during the week ending August 30, 2024. Total reserves now stand at $9.437 billion, compared to $9.403 billion recorded the previous week. While this increase is relatively small, it is viewed as a positive development, particularly given Pakistan’s ongoing economic challenges.
Furthermore, a narrowing trade deficit has contributed to the rupee’s stability. Stronger export performance, coupled with a reduction in imports, has bolstered foreign currency inflows into the country. The improving trade balance is helping to shield the rupee from further depreciation, as increased export revenues continue to provide much-needed foreign exchange.
Market sentiment remains cautiously optimistic, with many analysts predicting that the rupee is likely to remain relatively stable in the near term. This stability is expected to be underpinned by steady foreign currency inflows, a favorable outlook from international credit rating agencies, and ongoing government efforts to secure additional financing from bilateral or multilateral sources.
However, challenges remain on the horizon. The rupee’s performance in the coming weeks will be closely tied to the outcome of ongoing negotiations with the International Monetary Fund (IMF), as well as continued progress in reducing the trade deficit and bolstering foreign reserves. For now, the falling oil prices have provided a much-needed breather for the local currency.
