Karachi, November 8, 2024 – The Pakistani Rupee showed resilience on Friday, recovering 21 paisas against the US dollar, bolstered by a robust increase in foreign remittances.
The rupee closed at PKR 277.74 to the dollar in the interbank foreign exchange market, improving from the previous day’s rate of PKR 277.95. This gain signals a potential shift in the currency’s performance, which has been under pressure in recent months.
Currency analysts attribute this recovery to a strong inflow of workers’ remittances, which has provided essential support to the rupee. The State Bank of Pakistan (SBP) reported a remarkable 35% year-on-year (YoY) growth in remittances for the first four months of the current fiscal year (July-October 2024-25). The inflows surged to $11.85 billion compared to $8.79 billion in the same period last year, underscoring the crucial role that remittances play in stabilizing Pakistan’s economy and supporting the rupee.
In addition to remittance inflows, the rupee’s performance is also buoyed by a slight increase in the SBP’s foreign exchange reserves. Official reserves rose by $19 million, reaching $11.175 billion by the end of the week, up from $11.156 billion the previous week. Though modest, this rise reflects the central bank’s strategic efforts to safeguard reserve levels and provide a stable buffer for the rupee amid ongoing economic challenges.
Analysts suggest that as long as remittances remain strong, the rupee may see continued stability in the near term. Foreign remittances, primarily sent by overseas Pakistani workers, have consistently contributed to reducing the balance of payments deficit and curbing currency volatility. This steady inflow is seen as a vital source of foreign currency and has proven essential for stabilizing the rupee, which has experienced considerable fluctuations due to external economic pressures.
The stable inflows of export receipts further support this positive trend, fostering optimism for the rupee’s continued appreciation. By maintaining strong exports and attracting foreign remittances, Pakistan is gradually building a more resilient financial base.
Overall, the rupee’s recovery against the dollar highlights the critical impact of remittances on the country’s financial stability. While challenges remain, the upward momentum for the rupee, driven by a combination of remittance inflows, stable export receipts, and strategic reserve management, offers a glimmer of economic hope amidst an otherwise challenging landscape.
