Karachi, February 9, 2024 – The Pakistani Rupee (PKR) demonstrated resilience on Friday by gaining PKR 0.06 against the US dollar in post-election trading.
Closing at PKR 279.28 compared to the previous trading day’s PKR 279.34, the positive movement reflected market confidence following the general elections on February 8, 2024.
The one-day break for elections did not hinder the rupee’s performance, showcasing the market’s positive sentiment after the polls. Currency experts highlighted the noteworthy strength of the Rupee against the dollar, considering recent declines in foreign exchange reserves.
Data from the State Bank of Pakistan (SBP) revealed a $78 million decrease in weekly reserves, dropping from $13.341 billion to $13.263 billion for the week ending January 26, 2024. Despite these concerns, the Rupee has remained robust, attributed to lower import demands, increased corporate transactions, and various supporting factors.
Economists pointed out that the Rupee’s stability can be credited to a $700 million injection from the International Monetary Fund (IMF), effective fiscal strategies, and a favorable trade balance. The IMF’s substantial support has played a crucial role in enhancing Pakistan’s balance of payments and stabilizing the exchange rate amid declining foreign exchange reserves.
Fiscal policies have also contributed significantly to the Rupee’s stability. The first half of the fiscal year 2023-24 witnessed a notable 16.28 percent reduction in the import bill, declining from $31.21 billion to $26.13 billion. Concurrently, exports experienced a commendable 5.17 percent increase, reaching $14.98 billion. This dynamic has resulted in a contraction of the trade deficit by 34.79 percent, falling from $16.96 billion to $11.15 billion during the same period.
The positive trade balance and effective fiscal policies have acted as a buffer against economic challenges, bolstering the Rupee’s resilience. While the injection of funds and prudent fiscal strategies have played a vital role in maintaining stability, economists and policymakers remain vigilant.
The decline in foreign exchange reserves underscores ongoing economic concerns, prompting analysts to stress the importance of sustainable strategies for long-term currency and economic stability. Policymakers are urged to address underlying issues, promote economic growth, and diversify revenue streams to build a robust and resilient economy.
As the situation unfolds, the Pakistani business community, investors, and the general public continue to closely monitor developments, hoping for sustained economic recovery and a stable currency in the months ahead. The Rupee’s recent gains provide a positive signal, but concerted efforts are needed to navigate challenges and secure a strong economic footing for Pakistan.
