Karachi, Pakistan: The Pakistani Rupee (PKR) extended its winning streak against the US Dollar (USD) for the 23rd consecutive trading day on Friday.
This positive trend is attributed to a combination of factors, including improved economic indicators and increased foreign exchange inflows.
The interbank exchange rate closed at Rs158.16 to the dollar, marking a gain of Rs0.17 in rupee value compared to the previous day’s closing of Rs158.33. This latest rupee appreciation adds to the PKR’s remarkable recovery since its all-time low against the USD of Rs168.43 on August 26, 2020.
Several factors have contributed to the rupee appreciation:
• Improved Foreign Exchange Reserves: The State Bank of Pakistan (SBP) has seen a gradual improvement in its foreign exchange reserves, providing a cushion for the local currency.
• Lower Trade Deficit: A narrowing trade deficit, resulting from reduced imports and increased exports, has also supported the PKR.
• Inflows of Workers’ Remittances: Workers’ remittances from overseas Pakistanis have continued to be a significant source of foreign exchange inflows, bolstering the PKR.
• Surplus Current Account: A surplus in Pakistan’s current account, indicating that the country is earning more foreign exchange than it is spending, has further strengthened the local currency.
The SBP reported that workers’ remittances exceeded $2 billion for the fifth consecutive month in October 2020. This surge in remittances, driven primarily by inflows from Saudi Arabia, the United States, and the United Kingdom, has played a crucial role in supporting the PKR.
The Pakistani government’s efforts to formalize remittance flows through initiatives like the Pakistan Remittances Initiative (PRI) have also contributed to the growth in remittances. These measures have encouraged overseas Pakistanis to send their money through official channels, reducing the reliance on informal methods.
The continued appreciation of the rupee against the USD is a positive sign for Pakistan’s economy. It can help reduce the cost of imports, lower inflation, and improve the country’s overall economic outlook.
