Karachi, December 19, 2023 – The Pakistani Rupee (PKR) continued its upward trajectory against the US Dollar on Tuesday, closing the interbank foreign exchange market with an appreciation of PKR 0.20.
The interbank rate concluded at PKR 283.01 to the dollar, a positive shift from the previous day’s closing of PKR 283.21, signaling resilience in the local currency despite external pressures.
Financial analysts attribute the Rupee’s steady gain against the greenback to various factors, including recent data on the balance of payments released by the State Bank of Pakistan (SBP). Despite ongoing import and corporate payments, the Rupee has found support in key economic indicators that point towards a more stable financial landscape.
A pivotal factor contributing to the Rupee’s stability is the remarkable contraction in the Current Account Deficit (CAD). In the first five months (July – November) of the fiscal year 2023-24, Pakistan experienced a substantial 64.46 percent reduction in its CAD, reaching $1.16 billion. This stands in stark contrast to the $3.26 billion recorded during the same period in the previous fiscal year. Analysts highlight this significant decline as a result of a considerable reduction in the trade deficit, underscoring positive trends in the country’s economic performance.
Furthermore, experts emphasize the role of the surge in the country’s foreign exchange reserves in supporting the Rupee. Recent data indicates a notable increase of $99 million in Pakistan’s foreign exchange reserves for the week ending December 8, 2023. This positive development signals a robust trajectory for the country’s economic indicators and reinforces confidence in the stability of the local currency.
The steady growth in foreign exchange reserves holds particular significance as it enhances Pakistan’s capacity to meet international payment obligations, strengthening the overall economic outlook. Increased reserves serve as a buffer against external economic shocks, fostering confidence among investors and traders.
The Rupee’s recent appreciation aligns with broader efforts to bolster the country’s economic resilience and navigate global economic uncertainties. The positive trends observed in the balance of payments and foreign exchange reserves contribute to an optimistic outlook for Pakistan’s economic stability and financial well-being.
As the Rupee continues to make incremental gains against the US Dollar, stakeholders and market participants are closely monitoring these developments, recognizing the importance of a stable and resilient currency in sustaining economic growth and attracting investment.
