In a positive turn for the Pakistani economy, the rupee on Friday regained 19 paisas against the US dollar, closing at PKR 278.20 from the previous day’s PKR 278.39 in the interbank foreign exchange market. This appreciation was primarily driven by inflows from export receipts and remittances.
Currency analysts attributed this gain to an uptick in remittances from overseas Pakistanis, who are sending money home for the celebration of Eid ul Adha. “The festive season always sees a spike in remittances as families prepare for celebrations, and this year is no different,” said one analyst.
In addition to remittances, the influx of export receipts has played a crucial role in bolstering the rupee. Pakistan’s exporters have been benefiting from favorable market conditions, and the resulting foreign exchange inflows have provided support to the local currency.
However, the market is also witnessing heightened demand for the dollar due to preemptive buying by importers. These importers are placing orders with foreign suppliers in anticipation of potential hikes in duties and taxes on imported goods. This increased demand for the dollar has put some pressure on the rupee.
Despite these pressures, analysts remain optimistic about the rupee’s stability towards the end of the current fiscal year. They point to key economic indicators such as significant reductions in both the trade deficit and the current account deficit. “The recent contraction in the trade deficit and current account deficit provides a solid foundation for the rupee’s stability,” noted an analyst. “As long as these economic indicators continue to improve, we can expect the rupee to maintain its value relative to the dollar, at least in the near term.”
Over the past year, Pakistan’s economy has faced numerous challenges, with fluctuating exchange rates being a major concern for businesses and consumers. However, the government’s efforts to address the trade deficit and improve the current account balance have begun to yield positive results.
“The steps taken to curb the trade deficit are showing promise,” said another analyst. “With continued focus on economic reforms and stability measures, the rupee is expected to navigate through the fluctuations more resiliently.”
As the fiscal year progresses, all eyes will be on the government’s economic policies and their impact on the rupee. For now, the recent appreciation against the dollar offers a glimmer of hope for stability in the foreign exchange market.
