Karachi, October 18, 2024 – The Pakistani rupee gained 18 paisas against the US dollar on Friday, buoyed by improved foreign inflows and strengthening foreign exchange reserves. The rupee ended at PKR 277.61 against the dollar, up from the previous day’s close of PKR 277.79 in the interbank market.
Currency analysts attributed the rupee’s appreciation to an increase in foreign inflows, particularly a modest rise in the country’s foreign exchange reserves. According to the latest report from the State Bank of Pakistan (SBP), the nation’s net forex reserves saw an uptick of $64 million during the week ending October 10, 2024.
As of now, Pakistan’s total foreign exchange reserves stand at $16.111 billion, up from $16.047 billion the previous week. The expansion in reserves comes primarily from the SBP’s official holdings, which surged by $215 million, rising from $10.808 billion to $11.023 billion. This increase is seen as a positive development for the country’s economy, providing a buffer against external financial challenges.
Financial analysts have welcomed the rise in foreign exchange reserves, as it offers some much-needed relief to the rupee, which has faced pressure due to economic challenges in recent months. The improved reserve position reduces Pakistan’s dependence on foreign borrowing and helps bolster the country’s ability to meet international financial obligations.
“The boost in reserves is a significant step toward stabilizing the currency. With a stronger forex buffer, Pakistan can better manage external economic shocks,” said a senior financial expert. Analysts also note that rising reserves enhance market confidence in the rupee’s outlook, which could further curb volatility in the exchange rate.
Another factor supporting the rupee’s recovery is the ongoing improvement in Pakistan’s trade balance and current account deficit. Both deficits have narrowed in recent months, alleviating the pressure on foreign exchange reserves. A smaller deficit means less reliance on foreign currency to cover international payments, a critical issue for Pakistan’s economy.
In addition to the growing reserves, steady inflows from workers’ remittances and rising export growth have also contributed to the rupee’s stability. These factors, combined with the narrowing trade and current account deficits, offer a promising outlook for the currency’s performance in the near term.
Overall, the appreciation of the rupee is seen as a sign of improving economic fundamentals, with experts cautiously optimistic about further gains if current trends in foreign inflows and trade continue.