KARACHI: The Pakistani rupee is anticipated to maintain stability against the US dollar in the upcoming first week of new year 2025, supported by steady supplies and subdued dollar demand from importers, currency dealers have reported.
The rupee concluded Monday’s interbank trading session at 278.56 to the US dollar. On Friday, however, the local currency reversed its earlier losses and closed at 278.46. Dealers observed that since many importers and corporations had already fulfilled their year-end dollar buying obligations and the government has settled its external debts, the rupee is expected to trade within narrow ranges in the coming sessions.
The forex market may see additional supply as exporters likely sell dollars, complemented by steady remittance inflows from overseas Pakistanis, further supporting the rupee. Analysts note that the foreign exchange market has remained largely calm since May 2023, thanks to a narrowing gap between interbank and parallel market exchange rates.
A recent report by AKD Securities, titled ‘Pakistan Strategy 2025,’ forecasts that the rupee will remain stable, bolstered by the International Monetary Fund (IMF) programme and robust remittance flows. The IMF programme emphasizes exchange rate flexibility, improving FX market functionality, and strengthening institutional frameworks to safeguard financial stability.
The report further highlights that continued efforts to deepen the interbank FX market, coupled with enhanced price discovery mechanisms, will support currency stability. Transparency in the State Bank of Pakistan’s (SBP) interventions and FX accumulation strategy is deemed crucial for long-term foreign exchange market development.
The SBP has been able to conduct significant FX purchases, aiding in reserve building. Between June 2024 and August 2024, the central bank made net purchases of $1.9 billion from the forex market. Analysts credit the IMF’s willingness to enforce a shorter timeline for the repatriation of export proceeds, which enhances the SBP’s leverage to stabilize the currency despite relatively low foreign exchange reserves.
Market experts believe that the combination of remittances, export proceeds, and consistent SBP actions have laid a foundation for exchange rate stability as the new year begins. With external debt obligations met and import demands normalized, the rupee is expected to maintain its current trajectory, reinforcing confidence in Pakistan’s economic stability.
