Karachi, November 12, 2024 – The Pakistani rupee experienced further depreciation against the US dollar on Tuesday, closing at PKR 277.93 in the interbank market. This marks a second consecutive day of losses, with the rupee slipping by 7 paisas from the prior day’s close of PKR 277.86. The currency’s weakening trajectory reflects sustained demand for dollars as businesses resume financial transactions following the weekend.
Currency analysts attribute the rupee’s recent depreciation to increased dollar demand in the market. They note that the upward pressure on the dollar often emerges early in the week, especially as businesses settle payments. Despite the recent decline, analysts remain cautiously optimistic about the rupee’s medium-term stability, citing strong remittance inflows and incremental improvements in Pakistan’s foreign exchange reserves as key supportive factors.
According to the State Bank of Pakistan (SBP), remittances from overseas Pakistanis surged by an impressive 35% year-on-year in the first four months of the fiscal year (July-October 2024-25), totaling $11.85 billion compared to $8.79 billion during the same period last year. This robust inflow underscores the vital role of remittances in supporting the country’s foreign exchange reserves and stabilizing the rupee. Remittances remain a significant economic pillar, particularly during periods of heightened currency volatility.
Beyond remittances, the SBP’s foreign exchange reserves showed modest growth last week, increasing by $19 million to reach $11.175 billion. Though this uptick may appear minor, it reflects the central bank’s ongoing commitment to managing reserve levels, providing a stabilizing buffer against external financial pressures. A steady rise in reserves strengthens investor confidence and supports the rupee by mitigating sudden fluctuations in dollar demand.
Additionally, strong export performance has helped ease pressure on the rupee. Healthy export receipts alongside robust remittances provide a critical foundation for economic stability, reinforcing the rupee’s capacity to withstand external pressures.
Looking ahead, analysts maintain that if remittances continue to rise and exports remain stable, the rupee is likely to find support in the near term. Consistent inflows from overseas workers are essential in balancing Pakistan’s foreign currency requirements, especially as global economic uncertainties persist. With strategic reserve management, rising remittances, and steady export flows, Pakistan’s economic outlook appears relatively resilient, fostering optimism for the rupee’s performance in the coming weeks.
As Pakistan navigates ongoing challenges, the current foreign exchange landscape emphasizes the importance of foreign currency inflows and prudent reserve management in maintaining currency stability.
