Karachi, August 9, 2024 – The Pakistani Rupee strengthened against the US Dollar on Friday, closing at PKR 278.55 in the interbank market, marking an appreciation of 14 paisas from the previous day’s rate of PKR 278.69.
Currency analysts are crediting this upward movement to a combination of positive market sentiments and a modest rise in the country’s foreign exchange reserves. The State Bank of Pakistan (SBP) reported an $80 million increase in reserves for the week ending August 2, 2024, bringing the total to $14.472 billion. This growth is particularly significant given the ongoing economic challenges and the expected financial assistance from international institutions.
The SBP’s official reserves experienced a $51 million boost, climbing from $9.102 billion to $9.153 billion. This improvement, albeit modest, has provided some stability to the currency, reflecting a cautiously optimistic outlook among market participants.
Another factor contributing to the rupee’s appreciation is the subdued demand for dollars to cover import payments. Analysts noted that recent taxation measures implemented by the government have prompted importers to adopt a more cautious approach, leading to reduced pressure on the rupee.
Additionally, stronger inflows from export receipts and workers’ remittances have also played a role in supporting the rupee’s gains. These improved inflows have helped cushion the currency against potential downward pressures, providing a much-needed boost to market confidence.
As the rupee continues to navigate through a challenging economic landscape, the latest developments offer a glimmer of hope. The interplay between improved foreign exchange reserves, controlled import demand, and steady remittance flows suggests that the rupee could maintain its current trajectory, at least in the short term.
The market will continue to closely monitor any further developments, particularly in relation to foreign exchange reserves and the government’s fiscal policies, as these will be key determinants of the rupee’s performance in the coming weeks.
