Karachi, November 11, 2024 – The Pakistani rupee slipped by 12 paisas against the US dollar on Monday, closing at PKR 277.86 in the interbank foreign exchange market, down from Friday’s closing of PKR 277.74. This slight depreciation was primarily attributed to increased demand for the dollar to meet import and corporate payment obligations at the start of the week.
Currency analysts observed that the rupee often faces pressure on the first trading day due to heightened dollar demand from businesses and importers. This demand surge generally exerts downward pressure on the local currency, particularly as firms resume financial transactions after the weekend break. However, analysts remain optimistic about the rupee’s medium-term stability, supported by robust inflows of remittances and improved foreign exchange reserves held by the State Bank of Pakistan (SBP).
In the first four months of the current fiscal year (July-October 2024-25), workers’ remittances surged by an impressive 35% year-on-year, totaling $11.85 billion, up from $8.79 billion during the same period last year. This increase underscores the vital role that remittances play in bolstering Pakistan’s economy and supporting the rupee. Strong remittance inflows have consistently helped to balance the country’s foreign exchange needs, providing a reliable buffer against currency volatility.
In addition to remittances, a slight rise in the SBP’s foreign exchange reserves has also contributed to the local currency’s resilience. The central bank reported an increase in reserves of $19 million, bringing total reserves to $11.175 billion by the end of last week. Although modest, this increase reflects the SBP’s efforts to maintain reserve levels amid ongoing economic challenges.
According to analysts, as long as remittance inflows remain steady, the rupee’s stability could persist. Remittances from overseas Pakistani workers are seen as a critical support for the balance of payments, easing the impact of foreign currency demand. This steady flow of foreign currency has been instrumental in curbing the rupee’s fluctuations in a time of economic pressures.
Strong export receipts have further bolstered this positive trend, lending additional support to the rupee. With a combination of rising remittances, stable exports, and careful management of reserves, Pakistan’s economy is gradually building a more resilient foundation. While challenges remain, these positive inflows continue to foster optimism for the rupee’s performance in the coming weeks.
