Karachi, January 19, 2024 – The Pakistani Rupee (PKR) demonstrated resilience on the last trading day of the week, making a modest gain of PKR 0.08 against the US dollar.
The rupee closed at PKR 279.90 to the dollar, showing a slight improvement from the previous day’s closing rate of PKR 279.98 in the interbank foreign exchange market.
Currency analysts attribute the fluctuation in the exchange rate to the heightened demand for foreign currency, driven by import and corporate payments on the final trading day of the week. Despite the increased demand, the rupee managed to remain robust against the US dollar, thanks to recent inflows that have contributed to its stability.
A key factor behind the recent positive trend in the Rupee’s value is the injection of funds from international sources, notably the International Monetary Fund (IMF). Currency experts highlight the significant impact of a substantial $700 million injection from the IMF, playing a crucial role in shoring up the Rupee. Coupled with sound fiscal policies, this financial support has shielded the Pakistani currency from the uncertainties prevailing in the global economic landscape.
The positive repercussions of these developments are evident in the surge in Pakistan’s foreign exchange reserves. The State Bank of Pakistan (SBP) reported an impressive rise of $36 million, bringing the total reserves to $13.257 billion by the week ending January 5, 2024, compared to $13.221 billion recorded on December 29, 2023.
While the recent increase in reserves is a positive sign, economic analysts urge a comprehensive perspective. Despite the improvement, reserves are still below the levels observed in August 2021. Monitoring the trajectory of Pakistan’s reserves remains crucial to understanding the factors shaping this positive trend.
Experts point to multiple factors contributing to the strengthening of the Rupee, including a narrowing trade deficit and a decline in the import bill. In the first half of fiscal year 2023-24 (July – December), the import bill saw a significant decrease of 16.28 percent, dropping from $31.21 billion in the corresponding period of the previous fiscal year to $26.13 billion.
Conversely, the country experienced positive growth in exports, witnessing a commendable increase of 5.17 percent during the same period. Exports rose to $14.98 billion, up from $14.24 billion in the previous fiscal year, resulting in a substantial contraction of the trade deficit by 34.79 percent, reducing it from $16.96 billion to $11.15 billion in the first half of fiscal year 2023-24.
The combination of increased foreign exchange reserves, a shrinking trade deficit, and a reduced import bill signals robust economic performance for Pakistan, instilling confidence in the financial markets. Currency experts anticipate that sustained prudent fiscal policies and effective management of external balances will be pivotal in maintaining the positive momentum of the Pakistani Rupee against the US dollar in the coming months.
As Pakistan navigates the global economic landscape, these indicators paint a promising picture for the nation’s economic stability and resilience. The strengthening Rupee not only reflects the impact of recent international financial support but also showcases the effectiveness of domestic economic measures, positioning Pakistan as a resilient player in the ever-changing global economic scenario.
