Karachi, January 9, 2024 – The Pakistani Rupee (PKR) continued its gradual ascent against the US dollar on Tuesday, attributed to the accumulation of foreign exchange reserves.
The exchange rate experienced an appreciation of PKR 0.06, closing at PKR 281.22 to the dollar, a slight improvement from the previous day’s closing of PKR 281.28 in the interbank foreign exchange market.
Currency experts link this consistent appreciation of the rupee to a recent surge in foreign exchange reserves, particularly in the last 15 days. The State Bank of Pakistan (SBP) reported an impressive increase of $1.26 billion in reserves. Notably, there was an addition of $852 million in the week ending December 22, 2023, followed by an additional $464 million by the week concluding on December 29, 2023.
In an official statement, the SBP attributed this surge to an influx of funds from the government of Pakistan. The central bank’s reserves soared to $8.22 billion by the week ending December 29, 2023, marking a significant climb from $7.757 billion just a week earlier on December 22, 2023.
Experts emphasize the role of a shrinking trade deficit and a decreasing import bill as additional factors contributing to the strengthening of the Pakistani Rupee. During the first half (July – December) of the fiscal year 2023-24, the import bill for the country witnessed a noteworthy decline of 16.28 percent, dropping from $31.21 billion in the corresponding period of the previous fiscal year to $26.13 billion in the current fiscal year.
In contrast, Pakistan experienced positive growth in its exports, with a commendable increase of 5.17 percent during the first half of the current fiscal year. Exports rose to $14.98 billion, up from $14.24 billion in the same period of the preceding fiscal year. This positive trajectory led to a substantial contraction of the trade deficit by 34.79 percent, reducing it from $16.96 billion in the corresponding period of the previous fiscal year 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 showcases a robust economic performance for Pakistan, instilling confidence in the financial markets. Currency experts predict that continued prudent fiscal policies and effective management of external balances will play a pivotal role in maintaining the positive momentum of the Pakistani Rupee against the US dollar in the coming months.
As the country navigates through economic challenges, these developments bring optimism for sustained economic stability and growth. The strengthening of the Pakistani Rupee against the US dollar reflects positively on the country’s economic outlook, and market participants are closely monitoring these trends for potential impacts on trade and investment decisions. The overall sentiment suggests a positive trajectory for Pakistan’s economy, buoyed by prudent financial management and encouraging trade dynamics.
