Karachi, October 24, 2024 – The Pakistani rupee weakened by 11 paisas against the U.S. dollar on Thursday, closing at PKR 277.84 in the interbank foreign exchange market, down from the previous day’s PKR 277.73. The depreciation was driven by increased demand for dollars to meet external payments.
Currency experts attributed the rupee’s decline to mounting foreign payment obligations, particularly for imports and corporate transactions. However, despite the dip, experts remain optimistic about the rupee’s outlook due to improved foreign exchange reserves and narrowing foreign payment deficits.
The State Bank of Pakistan (SBP) reported an increase in the country’s foreign reserves, which grew by $64 million in the week ending October 10, 2024. This brings the total reserves to $16.111 billion, up from $16.047 billion the previous week. Notably, the SBP’s own holdings saw a significant rise of $215 million, climbing from $10.808 billion to $11.023 billion.
Financial analysts have welcomed this boost in reserves, viewing it as a critical factor in stabilizing the rupee. “The increase in reserves provides a cushion against external economic pressures, reducing reliance on foreign borrowing and enhancing confidence in the rupee’s future,” said a senior financial analyst.
The bolstered reserve position is a sign of economic resilience, making Pakistan better equipped to manage external economic challenges. Analysts believe that the stronger reserves will help alleviate downward pressure on the rupee, stabilizing its value in the medium term.
Alongside the improved reserve situation, other positive factors are contributing to the rupee’s stability. The country’s trade balance and current account deficit have been narrowing, leading to reduced demand for foreign currency to cover international payments.
Moreover, steady inflows of remittances from overseas Pakistanis and rising export growth have further supported the rupee. These factors are contributing to a more favorable economic environment, bolstering market confidence in the local currency.
While short-term fluctuations in the rupee’s value are expected due to external payment pressures, experts believe that the combination of stronger reserves, improved trade balance, and remittance inflows will sustain the rupee’s resilience against the dollar.
Overall, the outlook for the rupee remains positive, with the economic developments in recent weeks fostering confidence among investors and stakeholders in Pakistan’s financial stability.