Karachi, November 3, 2024 – The Pakistani rupee is projected to hold steady against the U.S. dollar in the upcoming week, supported by improving economic fundamentals and increased foreign capital inflows, according to currency analysts. For the week ending November 1, the rupee traded within a narrow range against the dollar, signaling a potential period of sustained stability.
A key factor underpinning the rupee’s steadiness is the narrowing of Pakistan’s trade deficit, which has shrunk by 5.59% during the first four months (July-October) of the fiscal year 2024-25, as reported by the Pakistan Bureau of Statistics (PBS). The trade deficit now stands at $6.97 billion, down from $7.39 billion during the same period last year. This reduction is attributed to a robust rise in exports, which grew by 13.45% year-on-year to reach $10.88 billion, supported by heightened demand in major markets. Imports, meanwhile, increased modestly by 5.17%, reaching $17.85 billion, suggesting a controlled approach to external spending that has further strengthened the trade balance.
Pakistan’s economy appears to be undergoing a gradual stabilization, backed by the new International Monetary Fund (IMF) program. Analysts at Topline Securities highlight that improvements in external accounts, easing inflation, and prudent fiscal measures are contributing to the strengthening of economic fundamentals, despite a moderate growth outlook. The IMF program has played a crucial role in stabilizing foreign reserves and has enabled a more sustainable financial environment for Pakistan.
The State Bank of Pakistan (SBP) recently projected net external repayments of approximately $10 billion for the fiscal year 2024-25, excluding rollovers and refinancing. With the current account deficit expected to stay around $1.3 billion, Pakistan’s total financing need (again excluding rollovers) is anticipated to be $11.3 billion, a figure considered manageable under the current fiscal framework. This fiscal discipline has helped reduce Pakistan’s gross external financing requirement to a nine-year low of $18.8 billion, per IMF reports, a development that has positively influenced Pakistan’s global credit ratings.
In a promising sign, credit rating agency Fitch upgraded Pakistan’s long-term issuer rating to CCC+ on July 29, 2024, and Moody’s followed with a Caa2 upgrade in late August. With liquid foreign exchange reserves expected to reach $13 billion by June 2025, marking their highest level since March 2022, analysts anticipate further rating upgrades as reserves strengthen.
The rupee has appreciated by 2.6% in FY24 and an additional 0.3% in the current fiscal year, underscoring improved external stability and capital inflows. Currency analysts expect the PKR/USD exchange rate to remain stable between 277-282 by June 2025, with a potential range of 295-300 by June 2026, reflecting optimism for continued economic resilience.
