Karachi, September 27, 2024 – The Pakistani rupee gained modest ground on Friday, appreciating by 5 paisas against the US dollar despite high demand for import payments. At the close of the interbank foreign exchange market, the rupee stood at PKR 277.64 per dollar, up from the previous day’s PKR 277.69.
While the rupee began the day with stronger momentum, boosted by recent positive economic developments, the quarterly import payment demand limited its appreciation. Analysts note that the rupee’s minor gain occurred in the context of significant pressures stemming from large import payments, which typically increase towards the end of each financial quarter.
One key factor supporting the rupee’s rise was the International Monetary Fund’s (IMF) approval of a $7 billion Extended Fund Facility (EFF). The IMF’s executive board endorsed the program as part of ongoing efforts to stabilize Pakistan’s fragile economy. This approval has been viewed as a critical financial lifeline for the country, which has been grappling with severe balance of payments issues and mounting external debt obligations.
“The rupee has been facing intense pressure due to high demand for US dollars, particularly for imports. However, the IMF loan approval has injected a sense of optimism into the market, providing temporary support for the rupee despite these challenges,” noted a currency analyst.
The IMF program is expected to provide much-needed funds to shore up Pakistan’s depleting foreign exchange reserves, which have been under significant strain in recent months. The loan will also help the country meet its short-term external financing requirements and support broader efforts to stabilize the economy amid rising inflation and a depreciating currency.
In addition to the IMF’s backing, incoming foreign exchange inflows from export receipts and remittances are also expected to lend further strength to the rupee in the near future. These inflows are vital for Pakistan’s economic health and could play a key role in alleviating some of the currency pressure.
“Export receipts and remittances should help bolster the rupee as these funds start to flow in,” commented another market analyst. “Moreover, the IMF’s approval of the EFF signals international confidence in Pakistan’s economic reforms, which should ease some of the pressure on the rupee.”
Despite these positive developments, experts warn that the rupee’s long-term stability will depend on sustained economic reforms and prudent fiscal management. External factors, such as the strength of the US dollar, fluctuations in global commodity prices, and geopolitical events, will also significantly influence the currency’s future performance.
