Karachi, March 20, 2024 – The Pakistani Rupee displayed resilience on Wednesday, strengthening by PKR 0.23 against the US dollar, buoyed by the revelation of a current account surplus in February 2024.
Closing at PKR 278.41 to the dollar in the interbank foreign exchange market, the rupee’s appreciation from the previous day’s closing rate of PKR 278.64 signifies positive momentum in the country’s economic landscape.
The surge in remittances and export receipts has been instrumental in facilitating Pakistan’s achievement of a current account surplus of $128 million in February 2024. This marks a significant turnaround from the $50 million deficit recorded in the same month of the previous year, underscoring the resilience and adaptability of Pakistan’s economy.
Furthermore, recent data unveiled by the State Bank of Pakistan (SBP) indicates promising signs for the nation’s economic stability. The Current Account Deficit (CAD) has witnessed a substantial reduction by 74 percent, declining to $999 million during the initial eight months (July – February) of fiscal year 2023-24. This reduction reflects prudent economic management and effective policy interventions aimed at bolstering the country’s fiscal health.
The strengthening of the rupee can also be attributed to the rollover of safe deposits by China, as acknowledged by Finance Minister Muhammad Aurangzeb. The Finance Minister expressed gratitude towards the Chinese leadership for their unwavering support, particularly highlighting the significance of SAFE deposits and the refinancing of commercial loans in enhancing Pakistan’s economic stability.
Currency analysts emphasize several factors contributing to the rupee’s stability against the dollar. Notably, recent inflows of remittances and export receipts have bolstered the country’s foreign exchange reserves, instilling confidence among investors. Additionally, optimism prevails regarding anticipated inflows from the International Monetary Fund (IMF).
The successful completion of the IMF review holds paramount importance for Pakistan, paving the way for the disbursement of the second tranche amounting to $1.2 billion under the $3 billion Stand-By Arrangement (SBA). This injection of funds is anticipated to provide crucial support to Pakistan’s economy, facilitating its stabilization and fostering growth.
Recent data released by the State Bank of Pakistan (SBP) indicates a significant increase in foreign inflows, with weekly foreign exchange reserves reaching $13.151 billion as of the week ending March 8, 2024. This surge underscores positive momentum within the economy, further bolstering investor confidence.
Moreover, Pakistan witnessed a notable 13 percent Year-on-Year (YoY) growth in workers’ remittances during February 2024, totaling $2.25 billion. Concurrently, exports registered a commendable 9 percent increase during the first eight months of fiscal year 2023-24, climbing to $20.35 billion. This growth trajectory not only reinforces the value of the rupee but also bodes well for the country’s overall economic outlook, signaling optimism for trade and economic activity.
As Pakistan continues to navigate economic challenges and capitalize on emerging opportunities, the resilience of the rupee against the dollar reflects the concerted efforts towards achieving sustainable growth and stability in the nation’s economy. With prudent fiscal policies and strategic partnerships, Pakistan aims to reinforce its position as a resilient and dynamic player in the global economic arena.
