Karachi, April 4, 2024 – The Pakistani Rupee faced a slight decline on Thursday, closing at PKR 277.93 against the US dollar in the interbank foreign exchange market, as compared to the previous day’s closing rate of PKR 277.92.
Analysts within the foreign currency market pointed to increased demand for the dollar as the primary factor behind this depreciation, particularly driven by heightened demand for import and corporate payments. Foreign companies operating in Pakistan were observed to be acquiring dollars to repatriate quarterly profits and dividends to their parent companies abroad, thereby exerting pressure on the local currency. Additionally, a surge in import payments further contributed to the heightened demand for the dollar.
Official data revealed that import payments surged by 9.25 percent to $4.73 billion in March 2024, compared to $4.33 billion in February 2024. This increase in import payments indicated a growing need for foreign currency to finance imports, thereby impacting the exchange rate.
However, despite this recent depreciation, the rupee had witnessed gains against the dollar over the past few weeks, primarily attributed to a decline in overall imports during the first nine months of the current fiscal year.
According to the Pakistan Bureau of Statistics (PBS), exports registered a notable increase with a growth rate of 9 percent during the first nine months (July – March) of the fiscal year 2023-24. Exports during this period reached $22.91 billion, up from $21.04 billion in the corresponding months of the previous fiscal year.
Moreover, the country’s trade deficit saw a significant reduction of 25 percent during the same period, amounting to $17.03 billion compared to $22.69 billion in the corresponding months of the previous fiscal year. This reduction was primarily attributed to a decrease in the import bill, which fell by 8.65 percent to $39.94 billion during July – March 2023-24, compared to $43.72 billion in the same period of the previous fiscal year.
Analysts expressed optimism regarding the stability of the rupee, citing improvements in the country’s foreign exchange reserves. According to the State Bank of Pakistan (SBP), the nation’s foreign exchange reserves increased by $37 million for the week ending March 22, 2024, reaching $13.428 billion. This increase reflects positive developments in Pakistan’s balance of payments, bolstering confidence in the nation’s economic outlook.
As Pakistan navigates its economic landscape, developments in foreign exchange markets will continue to be closely monitored by stakeholders, with efforts focused on maintaining stability and fostering sustainable growth.
