Karachi, October 25, 2024 – The Pakistani rupee appreciated by 20 paisas against the US dollar on Friday, settling at PKR 277.64 in the interbank foreign exchange market compared to the previous day’s rate of PKR 277.84.
Analysts attribute this modest gain to improved foreign inflows and increased investor confidence amid positive economic indicators.
A small uptick in the State Bank of Pakistan’s (SBP) foreign exchange reserves has contributed to the rupee’s upward momentum. The SBP reported an increase of $18 million in reserves, with the total standing at $11.014 billion as of October 18, 2024. Although slight, this gain in reserves has helped mitigate the effects of a decline in reserves held by commercial banks, providing support for the rupee amid ongoing market fluctuations.
Currency analysts highlighted several favorable economic trends bolstering the rupee’s stability, including a narrowing trade balance and current account deficit. These shifts have decreased the demand for foreign currency, easing pressures to cover international payments. The improvement in trade balance, along with a healthier current account, signals enhanced financial resilience for the country, positively impacting investor sentiment in the rupee.
Additionally, steady inflows of remittances from overseas Pakistanis and a rise in exports have added to the rupee’s stability. Remittances remain a vital source of foreign exchange for Pakistan, and combined with an uptick in export revenues, these inflows support a more favorable economic environment. This stability not only boosts the rupee’s position but also strengthens overall market confidence.
“The combination of stronger reserves, reduced demand for foreign currency, and consistent remittance inflows has created a supportive environment for the rupee,” noted a currency analyst. “While we expect minor fluctuations due to external payment pressures, the overall outlook for the rupee remains resilient.”
Short-term variations are anticipated due to external factors, including the global economic climate and inflationary pressures. However, experts suggest that Pakistan’s foreign exchange reserves, coupled with improved trade dynamics, offer a promising foundation for the rupee’s continued strength against the dollar.
Overall, recent economic developments are fostering optimism among investors and stakeholders, as Pakistan’s financial outlook appears increasingly stable. The favorable conditions in recent weeks are expected to continue supporting the rupee, which could further strengthen if positive trends in trade, reserves, and remittances persist.