Rupee Gains Two Paisas to Dollar on Budget Restrictions

Rupee Gains Two Paisas to Dollar on Budget Restrictions

Karachi, June 13, 2024 – The Pakistani rupee gained two paisas against the US dollar on Thursday, bolstered by the latest measures introduced in the 2024-25 budget.

The rupee closed at PKR 278.59 to the dollar, slightly up from the previous day’s closing of PKR 278.61 in the interbank foreign exchange market.

Currency experts attributed the marginal gain to the strict measures outlined in the new budget. These measures are designed to stabilize the currency by discouraging the import of luxury and non-essential items. The government’s strategy aims to curb excessive spending on imports, thereby supporting the rupee’s value.

“The 2024-25 budget has introduced several steps to maintain the rupee’s stability,” said a currency analyst. “By discouraging non-essential imports, the government aims to reduce the demand for foreign currency, which helps in sustaining the rupee’s value.”

Throughout the day, the currency market saw a demand for the dollar for import and corporate payments. Despite this, the rupee showed resilience, maintaining its slight gain against the US dollar. Experts believe this resilience is partly due to positive economic indicators such as a narrowing current account deficit and a reduction in the trade deficit.

“The improvement in the current account and trade deficits has provided some support to the rupee,” noted another currency expert. “These factors contribute to a more favorable balance of payments situation, which in turn helps stabilize the currency.”

However, experts also caution that the growth targets set for the next fiscal year could lead to increased demand for imported raw materials and essential items. This rise in demand for dollars might put pressure on the rupee, potentially causing its value to fall.

“As the economy grows, so will the demand for imports, particularly raw materials and essential goods,” the analyst added. “This could increase the demand for dollars, which might negatively impact the rupee’s value in the longer term.”

In summary, while the immediate impact of the 2024-25 budget measures has been positive for the rupee, sustaining this stability will depend on the government’s ability to manage import demands and other economic challenges in the coming fiscal year.