Karachi, December 19, 2024 – The Pakistani rupee experienced a marginal depreciation of 12 paisas on Thursday, primarily driven by a surge in dollar demand for import settlements and corporate remittances as the year-end approaches.
The rupee concluded the trading day at PKR 278.35 against the US dollar, slipping from the previous day’s closing value of PKR 278.23 in the interbank foreign exchange market.
Currency experts attribute this decline to heightened dollar requirements from corporate entities and importers, a common phenomenon as businesses finalize their financial commitments for the fiscal year. Traditionally, multinational corporations remit earnings to their parent companies abroad at this time, further intensifying dollar demand.
Despite the slight weakening, analysts remain cautiously optimistic about the rupee’s stability. This optimism stems from Pakistan’s markedly improved external sector indicators. For the first time in years, the nation has reported a notable current account surplus of $944 million during the first five months of the fiscal year 2024-25 (July to November). This represents a dramatic turnaround from the current account deficit of $1.68 billion recorded during the same period last year, underscoring a significant strengthening in the country’s economic fundamentals.
Another factor contributing to the currency’s resilience is the steady improvement in foreign exchange reserves. The State Bank of Pakistan (SBP) recently reported a $13 million increase in reserves, which now stand at $12.051 billion as of the week ending December 6, 2024. Though incremental, this upward movement has bolstered investor confidence in Pakistan’s financial markets.
Additionally, the robust growth in remittances from overseas Pakistanis has served as a crucial support for the rupee. Between July and November 2024, remittances surged by an impressive 34% year-on-year, reaching $14.77 billion compared to $11.05 billion during the corresponding period last year. This influx of foreign currency has alleviated external financial pressures and reinforced liquidity in the domestic economy.
In conclusion, while the rupee has encountered minor headwinds due to seasonal dollar demand, the broader economic landscape reflects a favorable trajectory. Sustained improvements in external accounts, rising reserves, and record-high remittances provide a robust foundation for the currency’s stability in the medium term.