Karachi, April 9, 2024 – The Pakistani Rupee closed stable against the US dollar on Tuesday, maintaining its position at PKR 277.94 in the interbank foreign exchange market.
This marginal appreciation of PKR 0.01 from the previous day’s closing rate of PKR 277.95 signifies the ongoing dynamics shaping the currency market.
Currency experts attribute the stability in the rupee’s value to improved inflows of remittances despite rising demand for the dollar due to import and corporate payments. Pakistan has seen a significant surge of 31 percent in remittances on a month-on-month basis in March 2024. According to data released by the State Bank of Pakistan (SBP), overseas Pakistani workers sent $2.954 billion in March 2024, compared to $2.25 billion in February 2024.
However, analysts also note that improved sentiments prevail due to the surge in foreign exchange reserves held by the State Bank of Pakistan (SBP), which has helped mitigate further losses in the rupee’s value. Official data reveals a marginal increase in SBP’s foreign exchange reserves, reaching $8.04 billion for the week ending March 29, 2024, compared to $8.022 billion in the previous week. Despite this uptick, the total foreign exchange reserves of the country experienced a decline of $49 million during the same period.
The SBP reported a decrease in the total foreign exchange reserves of the country to $13.379 billion by the week ending March 29, 2024, compared to $13.428 billion recorded a week earlier on March 22, 2024.
Analysts highlight increased demand for the dollar as a key factor behind the slight depreciation of the rupee. This demand is driven by heightened import requirements and corporate payments. Foreign companies operating in Pakistan are observed acquiring dollars to repatriate profits and dividends to their parent companies abroad, thereby exerting pressure on the local currency. Additionally, a surge in import payments further bolsters the demand for the dollar.
Official statistics reveal a notable 9.25 percent increase in import payments to $4.73 billion in March 2024, compared to $4.33 billion in February 2024. This surge indicates a growing need for foreign currency to finance imports, consequently impacting the exchange rate.
Despite recent fluctuations, the rupee had witnessed gains against the dollar in previous 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 exhibited significant growth, registering a 9 percent increase 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.
The stability of the Pakistani rupee against the US dollar reflects a delicate balance between various economic factors, including remittances, foreign exchange reserves, import dynamics, and trade performance. As Pakistan navigates through these complexities, market participants continue to monitor developments closely, anticipating their impact on currency valuations and overall economic stability.
