Karachi, February 4, 2025 – The Pakistani rupee appreciated by 8 paisas against the US dollar in the interbank foreign exchange market on Tuesday.
The rupee closed at PKR 278.96 to the dollar, improving from the previous day’s level of PKR 279.04.
Currency analysts attributed this modest recovery to positive reports about Pakistan’s export performance. The country’s exports have seen a notable rise, with a 10% increase recorded in the first seven months (July-January) of the fiscal year 2024-25. According to data from the Pakistan Bureau of Statistics (PBS), exports reached $19.55 billion, up from $17.78 billion during the same period last year. This growth indicates a promising trend for the economy, contributing to the rupee’s recovery in the market.
Despite this positive development, the stability of the rupee remains vulnerable, primarily due to the country’s declining foreign exchange reserves. Data from the State Bank of Pakistan (SBP) shows that reserves dropped by $137 million in the week ending January 24, 2025. The reserves now stand at $16.052 billion, down from $16.189 billion the previous week. This decline, largely driven by external debt repayments and other liabilities, continues to pose a challenge to the rupee’s overall stability in the foreign exchange market.
However, there is a glimmer of optimism with Pakistan’s improving balance of payments. For the first half of fiscal year 2024-25 (July-December 2024), the country registered a current account surplus of $1.21 billion, a significant recovery from the $1.40 billion deficit recorded in the same period the previous year. This positive shift highlights ongoing economic adjustments that could provide support for the rupee in the coming months.
In addition to export growth and a positive current account, remittances from overseas Pakistanis are playing a crucial role in stabilizing the rupee. Remittance inflows surged by 38% in the first half of FY 2024-25, reaching $17.85 billion, compared to $13.44 billion in the previous year. This surge in remittances is providing vital support to the country’s foreign exchange reserves, offering a buffer against external financial pressures that could otherwise undermine the rupee’s value.
Despite ongoing challenges, including declining foreign reserves, the combination of improved exports, a current account surplus, and strong remittance inflows could provide a foundation for greater stability in the Pakistani rupee moving forward.