Karachi, January 14, 2025 – The Pakistani rupee slipped to PKR 278.72 against the US dollar in the interbank market on Tuesday, marking a slight depreciation of 4 paisas from the previous day’s closing of PKR 278.68.
Currency analysts attributed the rupee’s weakening to heightened demand for dollars, driven by import and corporate payment obligations. While remittance inflows have provided occasional relief, the rupee continues to face downward pressure amid dwindling foreign exchange reserves. This mixed trend underscores the broader economic challenges confronting Pakistan.
According to the State Bank of Pakistan (SBP), the nation’s foreign exchange reserves declined by $31 million in the week ending January 3, 2025. The total reserves now stand at $16.378 billion, down from $16.409 billion the previous week. The steady decline in reserves has amplified pressure on the rupee, emphasizing the urgent need for strategic fiscal and monetary reforms to stabilize the currency.
Despite these hurdles, remittances from overseas Pakistanis have emerged as a key buffer against the rupee’s depreciation. During the first half of FY2024-25 (July–December), remittance inflows surged to $17.85 billion, a 38% year-on-year increase compared to $13.44 billion in the same period last year. This significant growth highlights the critical role of the Pakistani diaspora in supporting the nation’s economy and partially offsetting the rupee’s decline.
However, the rising import bill continues to weigh heavily on the rupee. The Pakistan Bureau of Statistics (PBS) reported a 17.44% increase in imports for December 2024, with the monthly bill climbing to $5.29 billion from $4.50 billion in November. The surging dollar demand to meet these import needs remains a persistent challenge, further eroding the rupee’s value.
The interplay between remittance inflows, shrinking reserves, and mounting import payments will play a crucial role in shaping the rupee’s performance in the coming months. Policymakers are tasked with implementing robust measures to strengthen foreign reserves, reduce import dependency, and stabilize the rupee. Achieving sustainable economic stability will require strategic initiatives to address these persistent financial pressures effectively.