Karachi, August 5, 2024 – The Pakistani Rupee experienced a decline of 13 paisas against the US Dollar on Monday, closing at PKR 278.63 compared to PKR 278.50 at the end of last week.
This depreciation is attributed to increased demand for foreign currency driven by import requirements and corporate payments.
Currency experts noted that such movements are common at the start of the week due to heightened demand for dollars. “Typically, the rupee faces pressure on Mondays as companies and importers settle their foreign currency needs,” said Rizwan Ahmed, a forex analyst. “This week’s decline is consistent with these usual patterns.”
Despite the dip, the long-term outlook for the rupee remains optimistic, bolstered by recent improvements in the country’s foreign exchange reserves. The official reserves held by the State Bank of Pakistan (SBP) increased by $75 million, reaching $9.102 billion as of July 26, 2024, up from $9.027 billion the previous week. This rise reflects the central bank’s ongoing efforts to stabilize the economy amidst global and domestic financial pressures.
Additionally, data from the Pakistan Bureau of Statistics (PBS) highlighted a decrease in the trade deficit for July 2024. The deficit fell by 19.05% to $1.95 billion from $2.41 billion in June. This improvement was partly due to a significant reduction in import costs, which dropped by 14.27% to $4.26 billion in July from $4.96 billion the month before. However, exports also saw a decline of around 10%, decreasing to $2.31 billion from $2.56 billion.
“While the drop in exports is a concern, the reduction in import bills has provided some relief to the rupee,” explained Dr. Farhan Malik, an economist at a local think tank. “The narrowing of the trade deficit is a positive development, helping to alleviate pressure on the currency.”
Looking forward, the rupee’s stability is expected to benefit from anticipated inflows under the International Monetary Fund (IMF) loan program, which could further bolster foreign reserves and provide additional support to the currency.
Overall, while the rupee’s short-term depreciation reflects immediate market pressures, the combination of improved reserves and reduced trade deficits offers a more favorable outlook for the currency in the near future.