Karachi, March 11, 2024 – The Pakistani Rupee (PKR) experienced a marginal decline on Monday, settling at PKR 279.08 against the US Dollar in the closing of the interbank foreign exchange market.
This nominal fall of PKR 0.04 compared to last Friday’s closing rate of PKR 279.04 has been attributed to increased demand for imports and corporate transactions at the beginning of the week.
Currency experts noted that the higher demand for import-related transactions typically exerts pressure on the local currency. However, the impact of this decline was partially offset by strong inflows of remittances, especially in anticipation of the upcoming holy month of Ramadan.
The State Bank of Pakistan (SBP) reported a noteworthy 13 percent Year-on-Year (YoY) growth in workers’ remittances to Pakistan for February 2024. Remittances during the month totaled $2.25 billion, showing a substantial increase from $1.99 billion in the corresponding period the previous year. The surge in remittances is seen as a positive indicator for Pakistan’s economy, providing stability to the national currency amid global economic uncertainties.
Despite the positive remittance trends, concerns have emerged regarding the overall stability of the Pakistani Rupee, primarily due to a decline in foreign exchange reserves. The SBP’s recent report revealed a significant reduction of $54 million in its weekly foreign exchange reserves. The reserves dropped to $7.896 billion by March 1, 2024, compared to $7.950 billion recorded a week earlier, as of February 23, 2024.
When considering the combined reserves of both the State Bank of Pakistan and commercial banks, the net foreign exchange reserves witnessed a weekly decrease of $19 million. As of March 1, 2024, the total reserves stood at $13.02 billion, reflecting a slight decline from the $13.039 billion recorded a week earlier. This dip raises concerns about the country’s ability to cushion against economic uncertainties and maintain foreign exchange stability.
Market analysts are closely monitoring these developments, emphasizing the importance of bolstering foreign exchange reserves to ensure financial resilience. The decline in reserves, albeit relatively modest, underscores the need for prudent economic management and strategies to address potential challenges on the horizon.
As the interplay between remittance inflows and foreign exchange reserves unfolds, stakeholders, including investors and policymakers, will be keenly watching for signals that may impact the trajectory of the Pakistani Rupee. The delicate balance between economic growth, currency stability, and global uncertainties will continue to shape the narrative of Pakistan’s financial landscape in the coming weeks.
