Karachi, December 18, 2023 – In a surprising turn of events, the Pakistani Rupee (PKR) demonstrated resilience by making a modest gain of PKR 0.05 against the US dollar on Monday.
The currency appreciated to PKR 283.21 to the dollar, marking a positive start to the week in the interbank foreign exchange market. This uptick is attributed to increased demand for import and corporate payments.
Financial analysts noted that Mondays typically witness a surge in dollar demand due to corporate transactions and import payments. However, the recent data on the balance of payments released by the State Bank of Pakistan (SBP) provided some much-needed support to the local currency against the greenback.
One of the key indicators contributing to the rupee’s stability is the significant contraction in the Current Account Deficit (CAD). During the first five months (July – November) of the fiscal year 2023-24, Pakistan experienced a remarkable 64.46 percent reduction in its CAD, plummeting to $1.16 billion. This is a stark contrast to the $3.26 billion recorded in the same period of the previous fiscal year. Analysts attribute this noteworthy decline to a substantial reduction in the trade deficit, highlighting positive trends in the country’s economic landscape.
In addition to the reduction in the CAD, the experts pointed out that the surge in the country’s foreign exchange reserves played a crucial role in supporting the stability of the rupee. According to recent data, Pakistan’s foreign exchange reserves witnessed a notable increase of $99 million in the week ending December 8, 2023. This development signals a positive trajectory for the country’s economic indicators and reinforces confidence in the local currency.
The steady growth in foreign exchange reserves is particularly significant as it bolsters Pakistan’s ability to meet its international payment obligations and strengthens the overall economic outlook. The increased reserves provide a cushion against external economic shocks and instill confidence in investors and traders.
While the modest gain of PKR 0.05 may seem incremental, it reflects the intricate interplay of various economic factors. The resilience shown by the rupee against the US dollar showcases the effectiveness of policy measures and economic reforms implemented by the government and central bank.
Market participants and stakeholders are keenly observing these developments, as they impact not only currency markets but also have broader implications for the national economy. As the fiscal year progresses, analysts will continue to monitor key economic indicators to assess the sustained stability of the Pakistani Rupee and its resilience in the face of global economic dynamics.
