Karachi, October 10, 2024 – The Pakistani rupee witnessed a decline of 7 paisas against the US dollar on Thursday, driven by increased purchases of the foreign currency for import payments and corporate settlements. The rupee closed at PKR 277.79 per dollar in the interbank market, down from the previous day’s close of PKR 277.72.
This marks the fourth consecutive session of decline for the rupee, which was trading at PKR 277.74 to the dollar on October 3, 2024. The sustained pressure on the local currency has raised concerns among market participants, who attribute the depreciation to rising demand for dollars, particularly from importers and corporations.
Currency market experts explained that as economic activity in Pakistan picks up, the demand for foreign exchange has increased significantly. “The rise in demand for the US dollar is a natural response to the increasing need for foreign exchange in trade-related payments,” said a currency analyst. This demand surge comes as companies seek to acquire dollars for the repatriation of profits following the quarter ending September 30, 2024.
Corporate dollar purchases have further compounded the pressure on the rupee. “The corporate sector is actively acquiring dollars to fulfill their commitments for profit repatriation, especially as the fiscal quarter comes to a close,” noted one expert. This heightened demand is expected to continue in the short term, placing further strain on the local currency.
Despite the recent losses, experts remain cautiously optimistic about the rupee’s medium-term outlook. Pakistan has recently seen improvements in its trade balance and current account deficits, which have narrowed in recent months. Analysts believe that these positive trends could offer support to the rupee in the near future.
“The shrinking of both the trade and current account deficits is a good sign for the rupee’s future performance,” said a currency expert. As these deficits narrow, pressure on the rupee is expected to ease, reducing the need for heavy reliance on foreign currency reserves to meet external obligations.
Moreover, experts pointed to an expected increase in export receipts and a steady inflow of workers’ remittances as factors that could help stabilize the rupee. These inflows are considered critical in offsetting the rising demand for foreign exchange and could provide the local currency with some much-needed support.
For now, the rupee remains under pressure due to increased demand for dollars. However, if the positive trends in trade and remittances continue, the rupee may recover and find stability in the coming weeks.