Karachi, July 22, 2024 – The Pakistani Rupee depreciated by 17 paisas against the dollar on Monday, pressured by high foreign currency demand for import payments. The rupee closed at PKR 278.30 to the dollar, down from Friday’s closing rate of PKR 278.13 at the interbank foreign exchange market.
Currency experts attributed the rupee’s decline to increased dollar demand from importers. “Typically, the rupee experiences pressure at the start of the week as importers place foreign orders after the weekend,” one expert noted.
Despite the current pressure, currency experts are predicting a stable outlook for the rupee. This optimism is bolstered by improved foreign exchange reserves and anticipated inflows from the International Monetary Fund (IMF). The State Bank of Pakistan (SBP) reported a weekly increase in the country’s foreign exchange reserves by $59 million. As of the week ending July 12, 2024, forex reserves climbed to $14.704 billion, up from $14.645 billion the previous week on July 5, 2024.
The SBP highlighted that its official reserves rose by $19 million, reaching $9.424 billion as of July 12, compared to $9.405 billion the previous week. Additionally, foreign exchange reserves held by commercial banks saw a significant rise of $40 million, totaling $5.28 billion, up from $5.24 billion during the same period.
This positive development follows Pakistan’s recent staff-level agreement with the IMF for a $7 billion Extended Fund Facility (EFF). While the IMF’s executive board still needs to approve the disbursement of the loan, the anticipation of these funds has already positively influenced market sentiment.
The financial markets are closely watching the rupee’s performance, especially in light of the upcoming IMF disbursements. The central bank’s increased reserves and the potential inflow from the IMF are seen as key factors that could stabilize the currency in the near term.
Market analysts believe that if the IMF board approves the loan, it will provide much-needed support to Pakistan’s economy, helping to stabilize the rupee further. They emphasize that maintaining higher foreign exchange reserves is crucial for sustaining market confidence and ensuring smooth import operations.
In conclusion, while the rupee faced some pressure at the beginning of the week due to import payment demands, the outlook remains cautiously optimistic. With enhanced foreign exchange reserves and the prospect of IMF support, the Pakistani rupee is expected to find some stability in the coming weeks.