Karachi, August 1, 2024 – The Pakistani rupee staged a comeback against the US dollar on Thursday, recovering after a three-day decline in the interbank foreign exchange market. The rupee gained 8 paisas, settling at PKR 278.66 per dollar, compared to the previous day’s closing of PKR 278.74.
Currency experts attributed this rebound to several factors, including an influx of export receipts and foreign remittances. The beginning of the month also saw a decrease in demand for the dollar for import and corporate payments, easing pressure on the rupee.
“The inflows from export receipts and remittances have provided much-needed support to the rupee,” said a leading currency analyst. “Moreover, the reduced demand for dollars for import and corporate settlements has helped stabilize the currency.”
The outlook for the rupee remains stable, bolstered by improved economic indicators such as a contraction in the budget deficit and easing inflation. “The government’s efforts to tighten fiscal policies and control inflation are bearing fruit, contributing to a more stable economic environment,” the analyst added.
Furthermore, the expected inflows from the International Monetary Fund (IMF) have kept market sentiments positive. Last month, Pakistan and the IMF reached a Staff-Level Agreement (SLA) for a $7 billion extended fund facility. This agreement, subject to approval by the IMF executive board, is anticipated to provide significant financial support and boost investor confidence.
“The anticipation of IMF inflows has played a crucial role in uplifting the rupee,” remarked another financial expert. “The agreement signifies international confidence in Pakistan’s economic reforms and fiscal discipline.”
The recovery of the rupee also reflects the broader efforts by the State Bank of Pakistan to maintain currency stability. By managing liquidity and ensuring a steady flow of foreign exchange, the central bank has contributed to the rupee’s resilience amidst global financial volatility.
Market participants are optimistic that the rupee will continue to perform well in the near term, provided that the current economic policies and inflow of foreign funds remain consistent. However, they caution that external factors, such as global oil prices and geopolitical developments, could still pose challenges.
In summary, the rupee’s rebound to PKR 278.66 against the US dollar marks a positive turn after a period of decline. Supported by export receipts, remittances, and anticipated IMF inflows, the rupee’s outlook appears stable. The improved economic indicators and reduced dollar demand further reinforce this stability, suggesting a favorable trend for the Pakistani currency in the coming weeks.