Karachi, May 17, 2024 – The Pakistani rupee on Friday demonstrated resilience by rebounding against the US dollar, closing at PKR 278.21, maintaining its position from the previous day’s closing in the interbank foreign exchange market.
Currency experts have attributed this stabilization and slight appreciation of the rupee to the recent rise in Pakistan’s foreign exchange reserves. Official data released on Thursday by the State Bank of Pakistan (SBP) indicated a notable increase in the reserves, which surged by $167 million over the past week.
According to the SBP report, the country’s total foreign exchange reserves reached $14.626 billion by the week ending May 10, 2024, up from $14.459 billion recorded a week earlier on May 3, 2024. This increase in reserves is seen as a positive indicator of economic stability and has bolstered confidence in the rupee.
The central bank’s own reserves also experienced a modest boost, rising by $15 million to stand at $9.135 billion by the end of the week ending May 10, 2024, compared to $9.12 billion reported the previous week. Meanwhile, the foreign exchange reserves held by commercial banks in Pakistan showed significant growth, increasing by $152 million to reach $5.491 billion by May 10, 2024, from $5.339 billion a week earlier.
This rise in foreign exchange reserves is a critical factor in supporting the rupee’s value against the dollar. It provides the central bank with greater capacity to manage exchange rate volatility and meet external obligations.
Simultaneously, Pakistan has undertaken efforts to stabilize its economy, which have resulted in a substantial reduction in the trade deficit. Data from the Pakistan Bureau of Statistics (PBS) shows a 17% year-on-year decrease in the trade deficit for the first ten months of the fiscal year 2024, narrowing from $23.54 billion to $19.51 billion. This reduction has played a vital role in fortifying the country’s fiscal health.
Moreover, Pakistan’s export sector has demonstrated remarkable resilience and growth. Exports have increased by 9.10%, reaching $25.28 billion compared to $23.17 billion in the previous fiscal year. Strategic pricing adjustments and successful market expansion initiatives have driven this growth, underscoring Pakistan’s efforts to enhance its export competitiveness.
Overall, the rebound of the rupee reflects a combination of improved foreign exchange reserves, a narrowing trade deficit, and robust export performance. These factors collectively highlight the positive strides Pakistan is making toward economic stability. As the country continues to implement measures aimed at economic recovery, the rupee’s performance against the dollar is expected to remain a key indicator of fiscal health and market confidence.