KARACHI: The Pakistani rupee appreciated by four paisas against the US dollar on Wednesday, closing at Rs161.61 in the interbank foreign exchange market compared to the previous day’s closing of Rs161.65. Currency dealers attributed the gain to a notable ease in import payment demand, which helped stabilize and strengthen the local currency.
According to market insiders, the reduced pressure from import payments throughout the day provided a breathing space for the rupee, allowing it to make a modest yet positive move. Dealers further noted that improved market confidence also played a role, supported by recent remarks made by Dr. Hafeez Shaikh, the Special Advisor to the Prime Minister on Finance and Revenue. Dr. Shaikh hinted at the possibility of further reduction in petroleum prices in the coming month, which would further ease the country’s import burden and help stabilize the rupee.
Experts are optimistic about the rupee’s performance in the near term, citing favorable external economic indicators. A significant decline in international oil prices has led to a considerable reduction in Pakistan’s oil import bill. This, combined with improved foreign direct investment (FDI) inflows and a shrinking current account deficit, has created a conducive environment for the rupee to appreciate further.
FDI into Pakistan saw a dramatic rise of 137 percent during the first nine months (July–March) of the fiscal year 2019-2020, increasing to $2.15 billion compared to $905 million in the same period last year. This surge in investment reflects growing international confidence in Pakistan’s economic outlook.
Furthermore, the current account deficit (CAD) narrowed significantly by 73 percent during the same period, falling to $2.77 billion from $10.28 billion. The improvement is largely attributed to a sharp decline in the import bill, as Pakistan successfully curtailed non-essential imports to manage foreign exchange reserves and strengthen its external position.
Analysts believe that continued control over imports, along with positive investment trends and declining oil prices, will support the rupee in the coming weeks, reinforcing the government’s broader economic stabilization efforts.