The Pakistani rupee is expected to stay stable against the U.S. dollar next week, starting November 11, 2024, as it benefits from a steady increase in remittance inflows and foreign exchange reserves, currency dealers say.
This past week, the rupee saw minor fluctuations, closing at 277.78 to the dollar on Monday, dipping slightly to 277.95 on Thursday, and then rebounding to finish the week at 277.74. A currency dealer commented, “With rising remittances and a boost in foreign exchange reserves, we expect the rupee to maintain its stability in the short term.”
In October, remittances surged by 23.9% year-on-year, reaching $3.1 billion, with a cumulative inflow of $11.8 billion in the first four months of the current fiscal year—a 34.7% increase from the same period last year. These remittances are a major source of support for Pakistan’s foreign exchange reserves, and they continue to play a key role in stabilizing the rupee.
Governor of the State Bank of Pakistan (SBP), Jameel Ahmad, announced on Friday that the country’s foreign exchange reserves are projected to reach $12 billion by the end of November. This announcement coincides with an upcoming visit from the International Monetary Fund (IMF), which will review Pakistan’s performance on its $7 billion loan program. The IMF’s assessment is crucial for Pakistan’s economic standing, as meeting their requirements enables access to vital funding and helps maintain investor confidence.
The rise in reserves is attributed to a shrinking current account deficit, fueled by stronger remittance flows, increased exports, and the receipt of funds under the IMF’s Extended Fund Facility (EFF). As of November 1, the SBP’s reserves were at $11.17 billion—enough to cover more than two months of imports. Additionally, the central bank’s dollar purchases in the interbank market, amounting to $1.3 billion in June and July, have also supported the reserves.
Governor Ahmad highlighted further positive indicators, including a rise in exports, improving foreign direct investment (FDI), and continued inflows through the Roshan Digital Account, which brought in $200 million in October. Pakistan has also met all requirements of the Asian Development Bank (ADB) and expects a $500 million loan disbursement soon.
According to a weekly report from Tresmark, remittances could help the country maintain a balanced current account, potentially stabilizing or even strengthening the rupee for the rest of the year. The report noted that swap rates are expected to increase as banks engage in sell-buy swaps to generate rupee liquidity for investments at higher rates.
With positive indicators from remittances, rising reserves, and support from international funding agencies, the rupee is well-positioned to hold steady in the near term.
