Karachi, October 28, 2024 — The Pakistani rupee weakened to PKR 277.68 against the US dollar on Monday due to increased demand for import payments, following a closing rate of PKR 277.64 last Friday in the interbank foreign exchange market.
The slight depreciation of 4 paisas highlights the ongoing volatility of the rupee, influenced by Pakistan’s import needs and market conditions, especially as the demand for dollars typically surges at the start of the week.
Currency experts noted that the rupee’s drop on Monday was primarily due to heightened demand for the dollar to fulfill external obligations. However, despite this minor setback, analysts maintain an optimistic outlook for the rupee’s stability, citing improved foreign inflows and a gradual rise in the State Bank of Pakistan’s (SBP) foreign exchange reserves as positive indicators for the currency’s resilience.
As of October 18, 2024, the SBP reported a modest increase of $18 million in its reserves, bringing the total to $11.014 billion. Although this rise is relatively small, it offers a cushion against recent declines in reserves held by commercial banks and provides a stabilizing effect amid ongoing market fluctuations. According to analysts, this small but steady increase in reserves is crucial for Pakistan’s efforts to manage external payment pressures and support the rupee.
In addition to foreign exchange reserves, Pakistan’s economy has shown signs of improved fiscal health. Experts point to a narrowing trade balance and a healthier current account deficit, both of which ease the demand for foreign currency and strengthen the rupee. This trend reflects a reduced need to cover international payments and supports a more sustainable balance between Pakistan’s imports and exports. Such improvements have also had a positive impact on investor sentiment toward the rupee, bolstering confidence in its value.
Steady inflows of remittances from overseas Pakistanis, combined with a rise in export revenues, have also contributed to the rupee’s relative stability. Remittances remain a vital source of foreign exchange for Pakistan, aiding both economic resilience and market stability. The recent uptick in export revenues complements these inflows, further solidifying the rupee’s position.
While Monday’s dip underscores the rupee’s sensitivity to import payment pressures, the broader economic trends reflect resilience. Experts remain hopeful that the combination of improved foreign exchange reserves, a favorable trade balance, and sustained remittance inflows will continue to support the rupee’s stability against the dollar in the coming months.