Karachi, January 19, 2025 – The Pakistani rupee is forecasted to remain stable in the upcoming week, beginning January 20, 2025, supported by steady inflows from remittances and exports. Analysts believe the local currency is benefiting from improved economic fundamentals and growing confidence in Pakistan’s financial outlook.
At the close of the previous week, the dollar was recorded at Rs278.71, slightly higher than the previous week’s closing rate of Rs278.58. Despite this marginal change, the rupee’s performance remains robust, aided by positive developments on the economic front.
One major factor bolstering the rupee is the country’s $538 million current account (CA) surplus, coupled with a recently announced $20 billion long-term partnership with the World Bank. Analysts note that these factors have provided a much-needed boost to market sentiment and increased short-term confidence in the rupee.
“A slight decline in the real effective exchange rate (REER) is unlikely to have a significant impact on the rupee at current levels,” analysts observed. They further emphasized that with inflation near its lowest levels in recent months, the REER does not pose a substantial threat to the rupee’s stability in the immediate term.
Another positive development has been a modest but noteworthy rise in premiums, which has encouraged exporters to sell forward contracts. This trend is supporting the rupee by bringing additional liquidity into the market. As of now, premiums for one-, two-, and three-month forward contracts stand at 130, 200, and 300 paisa, respectively. While this has provided a temporary boost, broader market participants remain cautious, waiting for more favorable rates to make larger transactions.
The improvement in Pakistan’s economic fundamentals, particularly the growth in exports and remittances, has played a pivotal role in strengthening the rupee. This growth has contributed significantly to the country’s current account surplus, which stood at $1,210 million during the first half of the current fiscal year. This is a remarkable turnaround compared to the deficit of $1,397 million recorded during the same period last year.
The rupee’s continued stability is a reflection of Pakistan’s ongoing efforts to improve its economic health. However, market watchers remain vigilant for external shocks or policy changes that could affect the currency’s trajectory in the coming months.
