Rupee Recovers 12 Paisas Against Dollar in Interbank Market

Rupee Recovers 12 Paisas Against Dollar in Interbank Market

Karachi, June 25, 2024 – The Pakistani Rupee showed a modest recovery on Tuesday, gaining 12 paisas against the US dollar in the interbank foreign exchange market. At the close of trading, the rupee stood at PKR 278.50 to the dollar, improving from the previous day’s closing of PKR 278.62.

Currency experts attributed this slight recovery to cautious dollar buying by importers, primarily for making foreign payments. Despite a high demand for dollars from the corporate sector, this was balanced by substantial inflows from export receipts, helping the rupee gain some ground.

Analysts remain optimistic about the rupee’s stability through the end of June, which also marks the close of the fiscal year 2023-24. This optimism is largely due to the recent increase in Pakistan’s foreign exchange reserves. The State Bank of Pakistan (SBP) reported that the country’s foreign exchange reserves grew by $31 million over the past week. As of June 14, 2024, total reserves were at $14.415 billion, up from $14.384 billion on June 7, 2024. The SBP’s reserves specifically rose by $32 million, reaching $9.135 billion from the previous $9.103 billion.

The rise in reserves is seen as a positive indicator of economic stability, enhancing Pakistan’s capacity to meet its foreign obligations and stabilize the local currency. “The increase in foreign exchange reserves and the inflow of export receipts and remittances have been crucial in supporting the rupee,” noted a senior currency analyst. “Despite the ongoing demand for dollars for import and corporate payments, these positive inflows have provided a necessary cushion for the local currency.”

Economic analysts also highlighted that recent measures in the 2024-25 budget have played a supportive role for the rupee by making importers more cautious in placing new orders. This cautious approach has reduced the immediate dollar demand, contributing to the currency’s stability.

The SBP’s efforts to boost reserves are seen as pivotal in maintaining economic stability. The rise in reserves not only supports the rupee but also enhances investor confidence, contributing to a more stable economic environment.

As the fiscal year draws to a close, market participants will continue to closely monitor these factors. The combined impact of higher foreign exchange reserves, cautious import activities, and positive inflows from exports and remittances will play a significant role in determining the rupee’s trajectory in the coming weeks.

Overall, the rupee’s recent recovery reflects a broader trend of cautious optimism in Pakistan’s financial markets, underpinned by prudent fiscal and monetary policies aimed at sustaining economic stability.