Karachi, January 24, 2025 – The Pakistani rupee witnessed a slight decline of 3 paisas against the US dollar on Friday, ending the trading day at PKR 278.75 to the dollar, down from the previous closing of PKR 278.72.
The decline is attributed to mounting external payment pressures, particularly driven by increased demand for dollars for imports and corporate payments on the final trading day of the week.
Currency experts noted that the rupee’s depreciation was largely influenced by the ongoing demand for foreign currency for import-related transactions and corporate settlements. This uptick in demand for dollars, coupled with the strain on foreign exchange reserves, contributed to the rupee’s slight fall against the greenback. Pakistan’s foreign exchange reserves have also seen a decline of $262 million in the week ending January 17, 2025. According to data from the State Bank of Pakistan (SBP), the country’s total net foreign exchange reserves stood at $16.189 billion on January 17, 2025, down from $16.451 billion the week before.
Despite this short-term pressure, analysts are optimistic that Pakistan’s improving balance of payments performance will provide some stability to the rupee. For the first half of the fiscal year 2024-25 (July-December 2024), the country posted a current account surplus of $1.21 billion, a significant recovery from the $1.40 billion deficit recorded during the same period in the previous fiscal year. This positive shift in the country’s external accounts is seen as a promising sign that Pakistan is making progress in addressing structural imbalances, boosting investor confidence in the process.
Additionally, remittance inflows from overseas Pakistanis have been a vital source of support for the nation’s economy, contributing to the strengthening of foreign reserves. In the first half of FY2024-25, remittances surged by 38%, totaling $17.85 billion compared to $13.44 billion in the same period last year. These inflows not only bolster foreign exchange reserves but also play a crucial role in alleviating external pressures on the rupee, helping to mitigate the adverse effects of global economic fluctuations.
In conclusion, while the Pakistani rupee faced minor pressure on Friday, the country’s improving balance of payments and strong remittance growth provide a buffer against future volatility.