The Pakistani Rupee appreciated by 17 paisas against the US dollar on Friday, closing at Rs165.79 in the interbank foreign exchange market. This marks an improvement from the previous day’s close of Rs165.96, as increased inflows of remittances and export receipts boosted the currency.
Currency experts noted positive market sentiment driven by the surplus in the current account and the ample foreign exchange reserves held by the country. These factors helped stabilize the rupee, which has experienced volatility in recent months due to various external pressures.
Experts attributed the rupee’s strength to consistent inflows of US dollars, primarily from workers’ remittances and export earnings. These inflows helped offset the strong demand for the greenback from importers and corporate entities making payments, especially on the last trading day of the week. Despite the demand for the dollar remaining high, the sufficient supply of foreign currency helped the rupee maintain its upward trajectory.
Throughout the outgoing week, the rupee gained a total of 51 paisas against the dollar, primarily in response to the State Bank of Pakistan’s (SBP) announcement regarding the balance of payments (BOP) on September 23, 2020.
The SBP’s report showed that Pakistan’s current account balance registered a surplus of $805 million during the first two months of the current fiscal year. This improvement was attributed to increased remittances and lower import payments, which provided much-needed support to the country’s foreign exchange reserves and overall economic stability.
According to SBP data, the current account balance marked a significant turnaround from a deficit of $1.21 billion during the same period in the previous fiscal year, underscoring the positive shift in Pakistan’s external account position.
The country’s trade deficit also contracted by 7.48%, standing at $3.4 billion during July-August 2020, compared to $3.69 billion in the corresponding period of the previous fiscal year. This decline in the trade deficit was supported by a 5.85% reduction in imports, which fell to $6.99 billion during the first two months of the fiscal year, compared to $7.43 billion in the same period last year.
The overall improvement in key economic indicators, including the current account surplus and declining trade deficit, has bolstered confidence in the rupee, helping it gain ground against the US dollar in the interbank market.