Karachi, November 28, 2023 – The Pakistani Rupee (PKR) staged a recovery on Tuesday against the U.S. Dollar, breaking a three-day downward trend. The rupee gained strength by PKR 0.12, reaching PKR 285.52 against the greenback in the interbank foreign exchange market, compared to the previous day’s closing rate of PKR 285.64.
The recent depreciation of the local currency had been a cause for concern, with the rupee facing consistent pressure against the U.S. Dollar. This trend was primarily attributed to a surge in demand for the dollar, driven by import needs and corporate payments.
However, a positive turn of events occurred a day earlier when news broke of Pakistan and the UAE signing multibillion-dollar projects. This development injected optimism into the currency market, leading to a rebound in the rupee’s value. The positive sentiment resulting from significant economic collaborations between the two nations seemed to have a stabilizing effect on the local currency.
Despite this recent recovery, market experts are cautious about the rupee’s prospects in the near future. They believe that the currency is likely to face ongoing pressure due to a decrease in foreign exchange reserves. The State Bank of Pakistan (SBP) reported a weekly decline of $217 million in its foreign exchange reserves, attributing external debt payments as a contributing factor.
As of the week ending November 17, 2023, the official reserves of the SBP stand at $7.18 billion, marking a significant drop from the $7.397 billion reported just a week earlier on November 10, 2023. This downward trend is part of an ongoing scenario, with the country’s total foreign exchange reserves witnessing a decrease of $234 million. The total reserves settled at $12.302 billion by the week ending November 10, 2023, compared to the preceding week’s level of $12.536 billion.
Currency experts emphasize that the determination of market-based exchange rates is a critical factor influencing the value of the rupee. Fluctuations in market dynamics, combined with external factors such as debt payments and import demands, contribute to the observed volatility in the exchange rate.
The overall economic landscape and global market conditions will likely play a crucial role in shaping the trajectory of the Pakistani Rupee in the coming days. Investors, businesses, and policymakers are closely monitoring these developments as they navigate the challenges posed by currency fluctuations and strive to maintain stability in the foreign exchange market.
