Karachi, September 24, 2023 – The Pakistani Rupee (PKR) is expected to sustain its upward trajectory against the US dollar as it gains strength from robust export and remittance inflows and an optimistic outlook for the country’s economy.
After closing at 295.95 per dollar on Monday in the interbank market, the PKR made significant gains throughout the week, closing at 291.76 on Friday, marking a 1.41 percent increase against the dollar over five sessions.
READ MORE: PKR Extends Winning Streak Against Dollar for 12th Consecutive Session
In a remarkable winning streak, the rupee has surged by Rs 15.34 or 5 percent against the dollar in 13 consecutive sessions since hitting a low of PKR 307.10 on September 5, 2023. Currency dealers are optimistic about the rupee’s ongoing upward trend, although they do not anticipate a substantial gain against the dollar in the near term.
One of the contributing factors to the strengthening rupee is the government’s campaign against illegal dollar transactions, currency hoarding, and black market activities. These efforts have led to increased liquidity in the forex market, with exporters actively selling dollars and daily remittances on the rise.
READ MORE: Pakistani Rupee Surges 4.3% Against Dollar in 11 Consecutive Sessions
The State Bank of Pakistan has taken steps to encourage remittances through legal channels by announcing monetary incentives for banks, further bolstering the sentiment surrounding the rupee. Additionally, the central bank’s foreign exchange reserves saw a slight increase, rising by $56 million to $7.7 billion in the week ending September 15.
Despite challenges posed by rising oil prices, there is optimism that inflation may moderate in the coming months. Factors contributing to this positive outlook include currency stability, improved foreign exchange reserves, crackdowns on smuggling, and a reduction in the prices of essential commodities such as wheat and sugar.
READ MORE: Pakistani Rupee Achieves 10th Consecutive Gain Against Dollar, Soars to PKR 294.90
The recent announcement by the Election Commission that elections are scheduled for the final week of January 2024 has alleviated concerns of a prolonged delay, resulting in increased investor confidence and a boost in positive sentiment.
However, analysts caution that despite administrative measures showing results in correcting the rupee’s course and stabilizing prices of essential goods like sugar, wheat, and cooking oil, a significant reduction in the high inflation currently experienced by Pakistanis may not be imminent. Rising petrol and energy prices remain key factors contributing to inflation.
READ MORE: PKR Gains 90 Paisas Against US Dollar: Ninth Consecutive Gain
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 altering the State Bank of Pakistan’s inflation projections.
As the rupee continues its upward journey, the Pakistani economy faces a complex landscape of challenges and opportunities, with both domestic and international factors influencing its course.
