Karachi, October 8, 2024 – The Pakistani rupee continued its downward trend, slipping slightly to PKR 277.67 against the US dollar by the close of the interbank foreign exchange market on Tuesday. This depreciation marked a minor decline of 3 paisas from the previous day’s closing rate of PKR 277.64.
Currency experts cited higher dollar demand for corporate payments and import obligations as the primary factors behind the rupee’s depreciation. Large corporate entities were seen purchasing dollars to repatriate profits and dividends for the first quarter of the fiscal year, further straining the currency’s value. Additionally, an uptick in economic activity in Pakistan has driven demand for imported goods, which has put additional pressure on the rupee.
Despite the rupee’s dip, market analysts maintain a cautiously optimistic outlook for the currency’s performance in the near future. Their optimism is anchored in the recent rise in Pakistan’s foreign exchange reserves, which have reached a high not seen in recent months. The State Bank of Pakistan (SBP) announced that as of September 27, 2024, the reserves had surged by $1.11 billion, climbing to $15.98 billion from $14.87 billion the previous week.
This reserve boost is largely credited to inflows from the International Monetary Fund (IMF), which has provided essential support to Pakistan’s economy. The IMF’s assistance, along with financing from other multilateral and bilateral partners, has helped shore up the country’s financial standing, alleviating immediate concerns over the balance of payments crisis that had been looming over Pakistan for months.
Economic observers believe that the improvement in foreign exchange reserves represents a pivotal moment for Pakistan as it grapples with external economic challenges such as rising import costs and inflation. A shrinking trade and current account deficit has also aided in stabilizing the rupee, and as these deficits continue to narrow, the pressure on the rupee could ease further.
Adding to the optimism, remittances from overseas Pakistanis and stronger export receipts have improved market confidence. These inflows are expected to bolster the rupee by reducing demand for dollars in the medium term, especially as external financial assistance and more disciplined fiscal policies take effect.
While the rupee still faces challenges, experts suggest that prudent economic management and sustained support from international lenders will likely enhance the currency’s resilience, balancing out the impact of import-driven dollar demand in the months to come.