Karachi, August 7, 2024 – The Pakistani Rupee on Wednesday ended down by 4 paisas against the US dollar at the close of the interbank foreign exchange market. The rupee closed at PKR 278.73 to the dollar, slipping from the previous day’s closing of PKR 278.69.
Currency analysts attributed the minor dip to increased dollar demand for import payments, which surged due to the seasonal uptick in import activities. Despite this short-term depreciation, the long-term outlook for the rupee remains positive, bolstered by recent improvements in the country’s foreign exchange reserves and favorable economic indicators.
As of July 26, 2024, the State Bank of Pakistan (SBP) reported a rise in official reserves, which increased by $75 million to reach $9.102 billion, up from $9.027 billion the previous week. This increase reflects the central bank’s ongoing efforts to stabilize the economy amid global and domestic financial pressures. The SBP’s interventions have included measures to curb speculative trading and ensure adequate liquidity in the market.
Additionally, data from the Pakistan Bureau of Statistics (PBS) highlighted a significant decrease in the trade deficit for July 2024. The deficit fell by 19.05% to $1.95 billion from $2.41 billion in June. This improvement was partly due to a substantial reduction in import costs, which dropped by 14.27% to $4.26 billion in July from $4.96 billion the previous month. However, exports also saw a decline of around 10%, decreasing to $2.31 billion from $2.56 billion. Analysts note that the reduction in the trade deficit is a positive sign, indicating that the country is gradually moving towards a more balanced trade position.
Looking forward, the rupee’s stability is expected to benefit from anticipated inflows under the International Monetary Fund (IMF) loan program. The IMF’s support is likely to further bolster foreign reserves and provide additional support to the currency, enhancing investor confidence and economic stability.
Overall, while the rupee’s short-term depreciation reflects immediate market pressures, the combination of improved reserves and reduced trade deficits offers a more favorable outlook for the currency in the near future. The government’s proactive measures and international support are expected to sustain this positive trend, ensuring a stable economic environment.
