Karachi, September 27, 2023 – The Pakistani Rupee (PKR) continued its impressive winning streak against the US dollar, with the exchange rate hitting PKR 288.70 during intraday trading on Wednesday.
This marks a significant gain of PKR 1.10 in rupee value against the dollar compared to the previous day’s closing rate of PKR 289.80.
The local currency’s remarkable resurgence extends to its 16th consecutive session, following a historic low of PKR 307.10 against the US dollar on September 5, 2023. Over the past fifteen trading sessions, the Rupee has demonstrated remarkable resilience, gaining 5.63 percent or PKR 17.30.
Currency experts attribute this strengthening of the Rupee to the Pakistani government’s decisive actions against illegal dollar transactions, currency hoarding, and black market activities. These measures have increased liquidity in the foreign exchange market, with exporters actively selling dollars, and daily remittances experiencing a surge.
The State Bank of Pakistan has also played a crucial role in fostering this positive sentiment by incentivizing remittances through legal channels. Additionally, the central bank’s foreign exchange reserves have witnessed a slight uptick, rising by $56 million to reach $7.7 billion during the week ending September 15.
Despite the challenges posed by rising global oil prices, there is optimism that inflation in Pakistan may begin to moderate in the coming months. Factors contributing to this positive outlook include currency stability, improved foreign exchange reserves, successful crackdowns on smuggling, and reductions in the prices of essential commodities such as wheat and sugar.
Furthermore, the recent announcement by the Election Commission of Pakistan regarding the scheduling of elections for the final week of January 2024 has alleviated concerns of a prolonged delay. This has resulted in increased investor confidence and a boost in positive sentiment in financial markets.
However, analysts caution that while administrative measures have shown promising results in correcting the Rupee’s course and stabilizing essential goods’ prices, a significant reduction in the high inflation currently experienced by Pakistanis may not be immediate. Rising petrol and energy prices continue to be significant factors contributing to inflation.
While most analysts expect the consumer price index inflation for September to remain around 30 percent, the weekly sensitive price index has seen three consecutive weeks of gains, potentially affecting the State Bank of Pakistan’s inflation projections.
As the Rupee continues its upward trajectory, the Pakistani economy faces a complex landscape of challenges and opportunities, with both domestic and international factors exerting influence on its course.