Karachi, January 17, 2025 – The Pakistani rupee appreciated by 15 paisas against the US dollar on Friday, marking a notable recovery, driven by the country’s rising foreign exchange reserves and a substantial surplus in the current account.
The rupee closed at PKR 278.71 per dollar, an improvement from the previous day’s rate of PKR 278.85 in the interbank market.
Currency experts attributed the rupee positive movement to the latest data showing a boost in Pakistan’s foreign exchange reserves and a remarkable turnaround in the current account balance. This gain occurred despite mounting foreign payment pressures, particularly on the last trading day of the week, when demand for the dollar typically spikes due to advance payments for imports and corporate sector transactions.
Key contributing factors include a significant uptick in the country’s net foreign exchange reserves, which surged by $73 million week-on-week. According to the State Bank of Pakistan (SBP), Pakistan’s reserves stood at $16.451 billion as of January 10, 2025, compared to $16.378 billion a week earlier. This increase is a positive signal of growing financial stability amid challenging global economic conditions.
Moreover, Pakistan has achieved an exceptional milestone, recording a $1.21 billion current account surplus for the first half of fiscal year 2024-25 (January–December 2024). This represents a remarkable recovery from a $1.40 billion deficit during the same period in the previous fiscal year, signaling a dramatic shift toward a more balanced external account.
Remittance inflows continue to be a pivotal factor in supporting Pakistan’s economy. The first half of FY2024-25 saw a 38% year-on-year increase in remittances, totaling $17.85 billion compared to $13.44 billion in the corresponding period last year. This surge underscores the critical role played by the Pakistani diaspora in stabilizing the national economy and cushioning the impact of declining foreign reserves.
However, the country faces an ongoing challenge in the form of a rising import bill, which continues to exert pressure on the rupee’s stability. Data from the Pakistan Bureau of Statistics (PBS) reveals a significant 17.44% increase in imports in December 2024, with the monthly import bill climbing to $5.29 billion from $4.50 billion in November. This surge in demand for dollars to finance imports is adding strain to the currency market, raising concerns about the long-term stability of the rupee amidst economic uncertainties.