Karachi, November 20, 2024 – The Pakistani rupee extended its downward trend on Wednesday, closing at PKR 278.04 against the US dollar in the interbank market, marking a 9-paisa depreciation from the previous day’s closing.
Currency experts link this decline to rising foreign payment obligations, including import costs and corporate profit repatriation. These factors are exerting pressure on the rupee despite signs of improvement in Pakistan’s external account. Experts remain cautiously optimistic about the rupee’s long-term stability, citing a current account surplus as a crucial factor.
The State Bank of Pakistan (SBP) reported a surplus of $349 million in October 2024, a marked improvement from the deficit recorded in the same month last year. This surplus represents the third consecutive month of positive figures, primarily driven by robust inflows of remittances from overseas Pakistanis.
Remittance inflows in October surged by 7% month-on-month and an impressive 24% year-on-year. For the first four months of FY2024-25, remittances totaled $11.85 billion, reflecting a 35% year-on-year increase. This strong performance has bolstered Pakistan’s foreign exchange reserves and alleviated some of the pressure on the rupee.
Steady export receipts have further contributed to stabilizing the currency. Exports, in tandem with remittances, are helping to address external account pressures. According to the SBP, official foreign reserves increased by $84 million, reaching $11.257 billion, providing some reassurance regarding the country’s financial stability.
However, challenges remain. Analysts warn that global economic uncertainties, including fluctuating commodity prices, geopolitical tensions, and tightening international financial conditions, could hinder sustained reserve accumulation and currency stability. Such vulnerabilities underscore the need for robust policy measures to shield the economy from external shocks.
In the short term, the rupee’s trajectory will largely depend on maintaining a steady inflow of foreign currency through remittances, exports, and other avenues. Policymakers must focus on managing these inflows effectively while addressing external obligations to minimize volatility in the foreign exchange market.
A strong current account surplus offers a valuable opportunity for the government to build a more resilient economic framework. Strategic measures to enhance export competitiveness, attract foreign direct investment, and diversify remittance sources could help Pakistan navigate ongoing challenges and ensure greater economic stability in the long run.
As the rupee faces immediate pressures, a balanced approach combining vigilance and proactive economic management will be crucial for achieving sustainable growth and currency stability.
