Karachi, January 27, 2025 – The Pakistani rupee experienced a slight depreciation at the start of the week, falling by 8 paisas against the US dollar in the interbank foreign exchange market. The rupee closed at PKR 278.83 to the dollar on Monday, compared to last Friday’s closing rate of PKR 278.75.
Currency analysts attributed the dip to the typical first-day trading pattern, which often sees increased dollar demand for import payments and corporate settlements. This uptick in dollar demand, coupled with pressures on Pakistan’s foreign exchange reserves, was a key factor driving the rupee’s decline.
The country’s foreign exchange reserves have been under strain, with the State Bank of Pakistan (SBP) reporting a $262 million decline in reserves during the week ending January 17, 2025. Total net reserves fell from $16.451 billion to $16.189 billion over this period. Analysts highlighted that the strain on reserves exacerbates exchange rate volatility, particularly as demand for foreign currency remains robust for import-related transactions and corporate obligations.
Despite this short-term pressure, there are signs of optimism in Pakistan’s economic outlook. The country’s balance of payments performance has shown marked improvement, with a current account surplus of $1.21 billion recorded during the first half of the fiscal year 2024-25 (July-December 2024). This is a significant recovery compared to the $1.40 billion deficit reported in the same period of the previous fiscal year. Analysts view this improvement as a promising indicator of progress in addressing Pakistan’s structural economic challenges, which is likely to bolster investor confidence.
Additionally, remittance inflows from overseas Pakistanis have played a critical role in supporting the economy. During the first half of FY2024-25, remittances surged by an impressive 38%, reaching $17.85 billion compared to $13.44 billion in the same period last year. These inflows not only provide a much-needed boost to foreign exchange reserves but also help mitigate external pressures on the rupee, offering some relief amid global economic uncertainties.
While the rupee remains under pressure in the short term, these positive developments—improved external accounts and strong remittance growth—are expected to provide stability and support for the local currency in the medium term, ensuring a steadier economic trajectory for Pakistan.