Karachi, January 20, 2025 – The Pakistani rupee strengthened against the US dollar on Monday, appreciating by 6 paisas in the interbank market.
The rupee closed at PKR 278.65 per dollar, compared to Friday’s closing rate of PKR 278.71, reflecting modest yet significant foreign exchange inflows that contributed to this gain.
Currency analysts attributed the rupee’s positive performance to improved macroeconomic indicators, particularly a rise in foreign exchange reserves and a significant improvement in Pakistan’s current account balance. Despite persistent challenges, including foreign payment pressures and heightened demand for the dollar on Fridays due to import payments and corporate sector transactions, the local currency managed to maintain its upward trajectory.
A key driver of the rupee’s strength was the week-on-week increase in net foreign exchange reserves. The State Bank of Pakistan (SBP) reported that reserves climbed by $73 million, reaching $16.451 billion as of January 10, 2025, compared to $16.378 billion the previous week. This growth is a promising indicator of Pakistan’s improving financial stability, even amid a volatile global economic landscape.
In addition to stronger reserves, Pakistan achieved a noteworthy current account surplus of $1.21 billion during the first half of the fiscal year 2024-25 (July–December 2024). This marks a substantial recovery from a deficit of $1.40 billion recorded during the same period of the prior fiscal year. The shift underscores the country’s efforts toward achieving a more balanced external account, a development welcomed by investors and financial experts alike.
Another critical contributor to the rupee’s resilience has been the surge in remittance inflows. During the first six months of FY2024-25, remittances rose by an impressive 38% year-on-year, reaching $17.85 billion compared to $13.44 billion in the corresponding period last year. The substantial inflows from overseas Pakistanis have played a vital role in bolstering the economy, mitigating the adverse effects of external shocks, and alleviating pressure on foreign reserves.
The combination of these factors—rising reserves, a current account surplus, and robust remittance inflows—paints an optimistic picture for Pakistan’s economy. While challenges remain, the rupee’s recent gains reflect improving confidence in the country’s financial outlook.