Karachi, October 11, 2024 – The Pakistani rupee experienced a notable rebound on Friday, gaining 15 paisas against the US dollar, attributed to an increase in foreign inflows.
The local currency closed at PKR 277.64 to the dollar, up from the previous day’s closing of PKR 277.79 in the interbank foreign exchange market. This recent uptick marks the end of a four-day losing streak for the rupee against its American counterpart.
Currency analysts have linked this appreciation in the rupee’s value to a rise in the country’s foreign exchange reserves. According to the latest data released by the State Bank of Pakistan (SBP) a day earlier, Pakistan’s total foreign exchange reserves reached $16.05 billion. This represents an increase of $64 million during the week ending October 4, 2024, bringing the reserves up from $15.983 billion the previous week.
In addition to improved reserves, analysts noted positive sentiments surrounding Pakistan’s recent improvements in its trade balance and current account deficits. Both deficits have shown significant narrowing in recent months, leading experts to believe that these trends may provide ongoing support for the rupee. “The shrinking of both the trade and current account deficits is a good sign for the rupee’s future performance,” commented a currency expert. As these deficits reduce, the pressure on the rupee is expected to ease, thereby decreasing the reliance on foreign currency reserves for external obligations.
Further contributing to the rupee’s stability are anticipated increases in export receipts and steady inflows of workers’ remittances. These remittances are crucial for offsetting the growing demand for foreign exchange and are expected to lend significant support to the local currency in the coming months.
While the recent gains are a positive development, market experts urge caution, noting that fluctuations in global economic conditions and domestic challenges could still pose risks to the rupee’s stability. Nevertheless, the current trend reflects a cautiously optimistic outlook for the Pakistani economy, suggesting that ongoing efforts to bolster foreign reserves and improve trade dynamics may continue to benefit the rupee in the future.
As the market continues to respond to both domestic and international factors, stakeholders remain vigilant, watching for indicators that could influence the rupee’s trajectory in the upcoming weeks.