Karachi, October 9, 2024 – The Pakistani rupee extended its losing streak for a third consecutive session against the US dollar on Wednesday, driven by a surge in demand for the foreign currency to meet import and corporate payment obligations.
The rupee weakened by 5 paisas, closing at PKR 277.72 per US dollar, compared to the previous day’s rate of PKR 277.67 in the interbank foreign exchange market. This marks a sustained decline in the local currency, which stood at PKR 277.74 against the dollar on October 3, 2024.
Currency market experts attributed the rupee’s depreciation to heightened demand for dollars from importers, as economic activity in the country has picked up pace. Additionally, companies have been purchasing foreign currency for the repatriation of profits for the quarter ending September 30, 2024, further pressuring the rupee.
“The rise in demand for the US dollar is a natural response to the increasing need for foreign exchange in trade-related payments,” explained one analyst. “The corporate sector is also actively acquiring dollars to fulfill their commitments for profit repatriation, especially as the fiscal quarter comes to a close.”
Despite the ongoing decline, experts remain cautiously optimistic about the rupee’s medium-term outlook. They point to positive developments in Pakistan’s trade balance and current account deficits, which have narrowed in recent months, as factors that could provide support to the local currency moving forward.
“The shrinking of both the trade and current account deficits is a good sign for the rupee’s future performance,” said a currency expert. “As these deficits narrow, pressure on the rupee should ease, reducing the need for the country to rely heavily on foreign currency reserves to finance its external obligations.”
Furthermore, the experts highlighted that an expected increase in export receipts and a steady inflow of workers’ remittances will bolster the rupee in the coming weeks. These two factors are seen as critical to stabilizing the local currency and offsetting the impact of rising import demand.
For now, the rupee remains under pressure as Pakistan’s economy continues to navigate through a complex mix of rising demand for foreign exchange and fluctuating market conditions. However, if the positive trends in trade and remittances continue, the local currency could find some respite and begin to recover from its recent declines.