Karachi, November 30, 2023 – The Pakistani Rupee (PKR) strengthened its position against the US Dollar on Thursday, closing at PKR 285.17 in the interbank foreign exchange market.
This marked an increase of PKR 0.22 from the previous day’s closing rate of PKR 285.39.
Currency analysts attribute this upward trend to the rollover of a substantial $3 billion deposit by Saudi Arabia. The Kingdom, acting through the Saudi Fund for Development (SFD), declared the extension of its deposit with the State Bank of Pakistan (SBP) for an additional year. Initially set to mature on December 5, 2023, this extension reflects the ongoing financial support between the two nations.
The positive momentum gained further traction with the announcement of several multibillion-dollar projects between Pakistan and the United Arab Emirates (UAE). The collaborative efforts between the two nations infused optimism into the currency market, playing a pivotal role in the recovery of the Rupee’s value. This move was welcomed as a step towards strengthening economic ties and fostering stability.
However, despite these encouraging developments, financial experts remain cautious about the Rupee’s future trajectory. The ongoing pressure on the currency is anticipated due to a decline in foreign exchange reserves. The State Bank of Pakistan reported a weekly decrease of $217 million in its foreign exchange reserves, citing external debt payments as a key contributing factor.
As of the week ending November 17, 2023, the SBP’s official reserves stand at $7.18 billion, witnessing a significant decline from the $7.397 billion reported just a week earlier on November 10, 2023. This downward trend aligns with the overall foreign exchange reserves of the country, which saw a decrease of $234 million. The total reserves settled at $12.302 billion by the week ending November 10, 2023, compared to the preceding week’s level of $12.536 billion.
Currency experts emphasize that market-based exchange rates are substantially influenced by the determination of the Rupee’s value. Fluctuations in market dynamics, combined with external factors such as debt payments and import demands, contribute to the observed volatility in the exchange rate.
While the recent positive developments have provided a temporary reprieve, vigilance is advised in monitoring external pressures and ensuring the sustainability of the Rupee’s newfound strength. The economic landscape remains dynamic, and a holistic approach is essential to navigate the challenges and opportunities on the horizon.