Karachi, July 15, 2024 – The Pakistani Rupee appreciated by 29 paisas against the US dollar on Monday, closing at PKR 278.11 from last Friday’s PKR 278.40 in the interbank foreign exchange market. This uptick in the rupee’s value is attributed to the prevailing optimism surrounding foreign inflows.
Currency experts credit the appreciation to the recent staff-level agreement (SLA) between the International Monetary Fund (IMF) and Pakistan. The agreement, part of the IMF’s new extended fund facility, proposes a $7 billion disbursement to Pakistan, contingent on the approval of the IMF executive board.
The IMF deal has sent positive signals to the market, increasing expectations of foreign inflows, which would bolster the rupee’s value against the dollar. Additionally, improvements in Pakistan’s foreign exchange reserves and a significant rise in workers’ remittances for the fiscal year 2023-24 have supported the rupee’s appreciation.
The State Bank of Pakistan (SBP) reported a notable increase of $72 million in the country’s weekly foreign exchange reserves. As of July 5, 2024, Pakistan’s foreign exchange reserves reached $14.645 billion, up from $14.573 billion the previous week. This positive trend in reserves is a promising indicator of the country’s economic stability.
Breaking down the reserves, the official foreign exchange reserves held by the SBP saw an uptick of $15 million. As of July 5, 2024, the SBP’s reserves stood at $9.405 billion, compared to $9.39 billion the previous week. This modest increase reflects a stable inflow of foreign currency, bolstering the central bank’s capacity to manage external financial obligations.
Further supporting the rupee’s recovery was the substantial inflow of workers’ remittances. According to a report by the SBP released on Tuesday, Pakistan received $30.25 billion in workers’ remittances during the fiscal year 2023-24, marking an 11 percent increase from the $27.33 billion received in the preceding fiscal year. This increase in remittances has provided a critical buffer for the country’s foreign exchange reserves and has positively impacted the exchange rate.
The combination of the IMF loan optimism, improved foreign exchange reserves, and robust remittance inflows has contributed to the rupee’s recovery against the dollar. The coming weeks will be crucial as markets await the finalization of the IMF loan program, which is expected to provide much-needed support to Pakistan’s economy.
Overall, the recent developments have painted a positive outlook for the Pakistani Rupee. The stability and strength of the rupee are likely to be further reinforced as the IMF deal progresses and additional foreign inflows materialize. This recovery is essential for maintaining economic stability and supporting growth in the country.