KARACHI – In a positive development for the Pakistani economy, the Pakistani Rupee gained 20 paisas against the US Dollar in the open market on Saturday.
The exchange rate settled at Rs138.60/Rs139.00 compared to the previous day’s closing of Rs138.70/Rs139.20 in the cash-free market. This uptick is attributed to significant inflows received by Pakistan under foreign financial assistance.
The State Bank of Pakistan (SBP) reported the receipt of $2 billion from Saudi Arabia and the United Arab Emirates (UAE) under financial assistance for Pakistan, with the central bank receiving $1 billion as the third tranche of the $3 billion pledged by Saudi Arabia on Friday. Additionally, another $1 billion was received from the UAE on Thursday. These funds were provided in accordance with an agreement signed on January 22, 2019, between SBP Governor Tariq Bajwa and the Director General of Abu Dhabi for Development.
The injection of foreign funds has had an immediate impact on the rupee’s exchange rate against the US Dollar, marking a positive trend. The closing rate of Rs138.60/Rs139.00 reflects a strengthening of the Pakistani Rupee, which had faced depreciating pressures in recent months.
Currency experts have attributed the gains to these inflows, acknowledging the positive impact on the local currency’s valuation. However, they caution that this may be a temporary relief, emphasizing the looming challenges associated with the repayment of foreign debts.
While the financial assistance from Saudi Arabia and the UAE provides crucial support to Pakistan’s foreign exchange reserves, concerns remain about the sustainability of such relief. The country is grappling with a substantial burden of foreign debts, and the inflows, while beneficial in the short term, do not alleviate the need for a comprehensive, long-term economic strategy.
The Pakistani government has been actively seeking assistance and investments from friendly countries to address its economic challenges. The financial aid from Saudi Arabia and the UAE is part of these collaborative efforts, aiming to stabilize the country’s economy and bolster its reserves.
As the Pakistani Rupee shows signs of improvement against the US Dollar, attention is focused on how the government will navigate the broader economic landscape. Sustainable economic reforms and strategies for managing and reducing the country’s debt burden will be pivotal in ensuring long-term stability and growth. The recent foreign financial assistance serves as a timely injection, but sustained efforts will be required to address the structural issues affecting Pakistan’s economic resilience.