Karachi, January 15, 2024 – The Pakistani Rupee (PKR) kicked off the week on a positive note, maintaining an upward trajectory against the US dollar in the interbank foreign exchange market.
At the close of Monday’s trading session, the rupee appreciated by PKR 0.12, settling at PKR 280.24 compared to the last Friday’s closing rate of PKR 280.36.
Currency experts attribute the rupee’s gain to significant inflows received by the State Bank of Pakistan (SBP) in recent weeks, fostering a resilient performance against the greenback. Positive sentiments were particularly fueled by the recent influx of $700 million from the International Monetary Fund (IMF).
The impact on the rupee is further underscored by the notable increase in Pakistan’s foreign exchange reserves. The State Bank of Pakistan (SBP) reported a substantial rise of $36 million, reaching $13.257 billion by the week ending January 5, 2024. This positive momentum is a welcome development, especially when compared to the reserves of $13.221 billion recorded on December 29, 2023.
While the recent surge in foreign exchange reserves is a positive indicator for Pakistan’s economic stability, it’s crucial to understand the broader context of this improvement. Despite the $36 million increase, the current reserves remain below the robust levels observed in August 2021. Economic analysts are closely monitoring Pakistan’s reserve trajectory, exploring the factors contributing to this recent trend.
Experts highlight the narrowing trade deficit and a declining import bill as additional factors fortifying the Pakistani Rupee. During the first half of the fiscal year 2023-24 (July – December), the country’s import bill witnessed a substantial decrease of 16.28 percent, dropping from $31.21 billion in the corresponding period of the previous fiscal year to $26.13 billion.
Conversely, Pakistan experienced positive growth in its exports, marking a commendable increase of 5.17 percent during the first half of the current fiscal year. Exports rose to $14.98 billion, up from $14.24 billion in the same period of the preceding fiscal year. This positive trajectory resulted in a significant contraction of the trade deficit by 34.79 percent, reducing it from $16.96 billion in the corresponding period of the previous fiscal year to $11.15 billion in the first half of fiscal year 2023-24.
The combination of increased foreign exchange reserves, a shrinking trade deficit, and a reduced import bill signals robust economic performance for Pakistan, instilling confidence in the financial markets. Currency experts anticipate that sustained prudent fiscal policies and effective management of external balances will be pivotal in maintaining the positive momentum of the Pakistani Rupee against the US dollar in the coming months.