Rupee Holds Steady to Dollar Amidst Positive Economic Indicators

Rupee Holds Steady to Dollar Amidst Positive Economic Indicators – The Pakistani rupee maintained stability against the US dollar on Wednesday, closing at PKR 278.30 in the interbank foreign exchange market. This stability is attributed to positive economic signals, particularly following Prime Minister Shehbaz Sharif’s recent visit to China.

Currency analysts credit the rupee’s steadiness to improved economic indicators and the promising outcomes of the Prime Minister’s China visit. The market is also buoyed by the expectation of another monthly current account surplus for April 2024.

In addition to these factors, a notable reduction in the country’s trade deficit has played a crucial role in supporting the rupee. The trade deficit narrowed by 15.25 percent, dropping to $21.73 billion from $25.64 billion during the corresponding period of the previous fiscal year. This improvement is attributed to a combination of rising exports and declining imports.

From July to May of the fiscal year 2023-24, Pakistan’s exports grew by 10.64 percent, reaching $28.07 billion, up from $25.37 billion in the same period last fiscal year. Simultaneously, imports fell by 2.37 percent, decreasing to $49.80 billion from $51 billion over the first 11 months of the current fiscal year.

The improved trade balance has instilled a sense of optimism among market analysts, who forecast that the rupee will remain stable in the near future. Analysts expect exchange rates to maintain a range-bound pattern, especially with the upcoming presentation of the budget for the fiscal year 2024-25, scheduled for later this month.

The Prime Minister’s visit to China has been particularly significant in bolstering market confidence. During his visit, various agreements were signed to enhance bilateral trade and investment, promising to further strengthen Pakistan’s economic position. These developments have generated positive market sentiment, contributing to the stability of the rupee.

As Pakistan continues to focus on improving its economic fundamentals, the stability of the rupee against the dollar reflects the country’s resilience and potential for growth. Market watchers will be keeping a close eye on upcoming economic reports and policy announcements, hopeful that the positive trends will continue to support the national currency.