KARACHI: The Pak Rupee gained 15 paisas against the US Dollar on Wednesday, buoyed by a report indicating a surplus current account for the first quarter of the current fiscal year. The rupee ended the day at Rs162.13 to the dollar, compared to the previous day’s closing of Rs162.28 in the interbank foreign exchange market.
Currency experts attributed the positive sentiments in the market to the release of the balance of payments statement for the first quarter (July – September) of the fiscal year 2020/2021. This report provided a much-needed boost to the rupee, reflecting improved economic conditions.
Analysts at Arif Habib Limited highlighted that Pakistan posted a quarterly current account surplus of USD 792 million during 1QFY21. This marks a significant turnaround from a deficit of USD 1,492 million recorded in the same period last year. Notably, this is the highest quarterly surplus since 1QFY04, almost 17 years ago, when the surplus was USD 1.1 billion. The last time Pakistan recorded a quarterly surplus was over five years ago in 3QFY15, with USD 514 million.
In September 2020 alone, the current account balance (CAB) showed a surplus of USD 73 million, a marked improvement from the deficit of USD 278 million in September 2019. Additionally, the CAB for August 2020 was revised to a surplus of USD 211 million from the previously reported USD 297 million.
Several factors contributed to the monthly surplus in September 2020. There was a notable 31 percent year-on-year (YoY) increase in remittances, amounting to USD 544 million. Moreover, total exports saw a 5.4 percent YoY rise, driven primarily by a 30 percent month-on-month (MoM) increase in the export of services. However, it is worth noting that total imports also rose by 11.6 percent YoY, amounting to USD 452 million during the same period.
The positive current account balance is a significant indicator of economic stability, and the rise in remittances and exports highlights the resilience of Pakistan’s economy despite global challenges. This development has provided a much-needed boost to investor confidence and the currency market.
Looking forward, sustained improvements in the current account balance could further stabilize the rupee and contribute to broader economic growth. Market analysts are optimistic that continued positive trends in remittances and exports will support the rupee in the coming months, potentially leading to a more robust economic outlook for Pakistan.
