KARACHI: The Pakistani Rupee appreciated modestly against the US dollar on Friday, gaining three paisas to close at Rs154.20 in the interbank foreign exchange market.
This improvement from the previous day’s close of Rs154.23 is attributed to a significant reduction in the country’s current account deficit.
Currency market experts attribute the rupee’s resilience to improved economic indicators, notably a sharp 72 percent decrease in the current account deficit for the first seven months of the fiscal year 2019/2020. The deficit shrank to $2.65 billion compared to $9.48 billion during the same period last year, as per the Balance of Payment data released by the State Bank of Pakistan (SBP).
“This appreciable narrowing of the current account deficit is primarily due to an increase in workers’ remittances and a substantial decline in the import bill,” explained a senior currency dealer in Karachi. “These factors have contributed to positive market sentiments and supported the rupee’s performance against the dollar.”
The positive trend was also evident in the open market, where the rupee also saw appreciation. The buying and selling rates for the dollar were recorded at Rs154.00 and Rs154.30 respectively, improving from the previous day’s rates of Rs154.10 and Rs154.40.
The significant reduction in the current account deficit is a key factor behind the rupee’s strength. The country has benefited from an increased flow of workers’ remittances, which have bolstered foreign exchange reserves. At the same time, a decline in global oil prices and a consequent reduction in the import bill have alleviated pressures on Pakistan’s trade balance.
Economic analysts also note that policy measures taken by the SBP and the government to curb non-essential imports and promote exports have started yielding results. These measures, coupled with financial support from international institutions like the International Monetary Fund (IMF) and friendly countries, have contributed to macroeconomic stability.
“The continued focus on fiscal prudence and strengthening the economic fundamentals is essential to maintain and build on the gains in currency stability,” remarked an economic analyst based in Karachi.
Moving forward, market participants remain cautiously optimistic about the rupee’s trajectory, as continued efforts to enhance export revenues and manage import levels will be crucial in maintaining the current account balance.
Overall, the minor but positive adjustment in the exchange rate on Friday reflects broader trends of economic stabilization and offers a hopeful outlook for the national economy.