Rupee Gains 12 Paisas Against Dollar as Forex Reserves Soar

Rupee Gains 12 Paisas Against Dollar as Forex Reserves Soar

Karachi, July 5, 2024 – The Pakistani Rupee exhibited a resilient comeback on Friday, strengthening by 12 paisas against the US dollar in the interbank foreign exchange market, supported by a notable surge in the country’s foreign exchange reserves.

Closing at PKR 278.38 to the dollar, the rupee showed improvement from the previous day’s closing rate of PKR 278.50. Currency market experts attribute this recovery to the significant increase in the foreign exchange reserves of the State Bank of Pakistan (SBP), which have been bolstered by positive inflows from multilateral agencies.

Earlier this week, the SBP reported a substantial addition of $494 million to its official foreign exchange reserves for the week ending June 28, 2024. This brought the total reserves of the central bank to $9.39 billion by the end of June 2024, up from $8.896 billion a week earlier on June 21, 2024. Such a rise underscores a strengthening of Pakistan’s external financial position amid ongoing economic developments.

The SBP attributed the increase in reserves primarily to inflows received from various multilateral agencies, reflecting growing confidence and support from international financial entities towards Pakistan’s economic stability and growth prospects.

Market analysts also point to other factors contributing to the rupee’s recovery, including a notable increase in exports and a slight decline in imports during the fiscal year 2023-24. According to data released by the Pakistan Bureau of Statistics (PBS), Pakistan’s exports saw a robust growth of 10.54 percent, reaching $30.65 billion in FY24 compared to $27.72 billion in the previous fiscal year.

In contrast, the import bill for Pakistan recorded a modest decrease of 0.84 percent, amounting to $54.73 billion in FY24 from $55.20 billion in FY23. This narrowing of the trade deficit, which contracted by 12.32 percent to $24.09 billion in FY24 from $27.47 billion in the previous fiscal year, signifies positive developments for Pakistan’s balance of payments and overall economic stability.

The combination of increased foreign exchange reserves, boosted by multilateral support, alongside improved export performance and controlled import expenditure, has reinforced market sentiment and contributed to the rupee’s recent appreciation against the dollar.

Looking ahead, experts anticipate that continued efforts to enhance export competitiveness, attract foreign investments, and maintain fiscal discipline will play crucial roles in sustaining Pakistan’s economic resilience and further strengthening the national currency in the global markets.

For now, the rupee’s positive trajectory reflects a broader optimism within Pakistan’s economic landscape, underscoring potential opportunities for sustained growth and stability in the foreseeable future.