The Pakistani Rupee experienced a notable appreciation of 38 paisas against the US Dollar on Friday, closing at Rs165.83 in the interbank foreign exchange market.
This positive trend was attributed to substantial inflows from export receipts and workers’ remittances, which helped offset the higher demand for dollars due to imports and corporate transactions.
Currency experts have reported that the market observed a surge in the supply of foreign exchange, primarily driven by robust export earnings and remittances from overseas workers. Despite a persistent demand for the US Dollar for import purposes and corporate transactions, the influx of funds played a crucial role in maintaining the stability of the local currency.
The confidence in the market was further bolstered by the substantial foreign exchange reserves held by the State Bank of Pakistan (SBP). As of the week ending on September 11, 2020, the liquid foreign exchange reserves of the country remained steady at $19.959 billion, compared to $19.961 billion recorded in the previous week ending September 04, 2020.
The official foreign exchange reserves of the SBP increased marginally by $12 million, reaching $12.82 billion by the week ending September 11, 2020, as opposed to $12.808 billion reported in the prior week. This uptick in the central bank’s reserves reflects a positive trend, contributing to the overall confidence of market participants.
On the other hand, the foreign exchange reserves held by commercial banks witnessed a modest decline of $14 million, settling at $7.139 billion by the week ended September 11, 2020, compared to $7.153 billion in the previous week. While this decrease in commercial bank reserves occurred, the overall stability in the country’s foreign exchange reserves, coupled with the central bank’s positive performance, has mitigated concerns.
The appreciation of the Pakistani Rupee is seen as a positive development for the country’s economy, as it not only makes imports more affordable but also reflects the resilience of the foreign exchange market. The government’s focus on economic reforms and efforts to boost exports and remittances has played a pivotal role in strengthening the Rupee against major currencies.
As Pakistan continues to navigate economic challenges, maintaining a balance between demand and supply in the foreign exchange market remains crucial. The current positive trajectory, supported by robust export and remittance inflows, positions the Pakistani Rupee on a stable footing and contributes to the overall economic stability of the country.
