Karachi, January 9, 2025 – The Pakistani rupee witnessed a modest recovery on Thursday, appreciating by 11 paisas against the US dollar in the interbank foreign exchange market.
This improvement came as a result of easing demand for the foreign currency, particularly for import and corporate payments.
By the day’s close, the rupee stood at PKR 278.61 to the dollar, compared to the previous day’s closing rate of PKR 278.72. Currency market analysts attributed this appreciation in the rupee to reduced pressure on dollar demand from importers and corporations, which allowed the local currency to regain some stability.
Earlier this week, the rupee faced significant pressure, primarily due to heightened demand for dollars driven by increased import payments. According to experts, the rupee’s performance remains closely tied to Pakistan’s rising import expenditures, which continue to strain foreign exchange reserves.
Recent data from the Pakistan Bureau of Statistics (PBS) highlights the escalating import burden. In December 2024, Pakistan’s import bill surged by 17.44%, climbing to $5.29 billion from $4.50 billion in November. This steep rise has amplified the need for dollars, placing additional pressure on the rupee.
However, some recent developments have provided relief to the rupee and the broader economy. The United Arab Emirates (UAE) recently announced the rollover of $2 billion in loans to Pakistan. This move is expected to bolster market confidence and support the country’s foreign exchange reserves, alleviating immediate pressure on the rupee.
Another encouraging sign is the improvement in Pakistan’s current account balance. Between July and November 2024, the current account recorded a surplus of $944 million, marking a stark reversal from the $1.68 billion deficit during the same period in 2023. This positive shift reflects improved fiscal management and provides much-needed stability to the rupee.
Additionally, remittances from overseas Pakistanis have played a crucial role in supporting the rupee. During the first five months of the fiscal year 2024-25, remittances surged by 34%, reaching $14.77 billion compared to $11.05 billion in the corresponding period last year. These robust inflows have strengthened foreign currency liquidity, easing external financial pressures and contributing to the rupee’s resilience.
As the rupee continues its fluctuating journey, these factors collectively suggest a cautiously optimistic outlook for the local currency in the coming months.