Karachi, November 28, 2024 – The Pakistani rupee registered a slight decline on Thursday, ending at PKR 278.04 against the US dollar in the interbank foreign exchange market, a modest drop of 8 paisas compared to the previous day’s closing of PKR 277.96.
This minor depreciation coincides with a rebound in global oil prices, which continues to challenge Pakistan’s economic stability. As a net importer of crude oil and refined petroleum products, Pakistan’s economy remains highly sensitive to changes in international energy prices. Recent increases in oil prices have put additional strain on the country’s foreign exchange reserves, already under pressure from heightened demand for industrial raw materials. Improving domestic economic activity has further amplified this demand, adding to the rupee’s struggles.
Despite these challenges, analysts are cautiously optimistic about the rupee’s medium-term prospects. They note that easing geopolitical tensions in the Middle East could stabilize global energy markets, indirectly alleviating some of the pressure on the Pakistani currency. Additionally, consistent inflows from exports and workers’ remittances have helped cushion the rupee against more significant declines.
The State Bank of Pakistan (SBP) recently reported a modest improvement in foreign exchange reserves, with an increase of $29 million for the week ending November 15, 2024, bringing total reserves to $11.288 billion. Export earnings further boosted reserves by $84 million, raising official reserves to $11.257 billion. These positive developments have helped sustain investor confidence, reflected in modest recoveries in the equity markets.
However, experts stress the importance of implementing structural reforms to ensure long-term currency stability. Key priorities include strengthening the export sector, diversifying the economy, and reducing dependence on short-term financial inflows. Enhancing domestic industrial capacity and fostering stronger trade relationships could also provide greater resilience against external shocks.
While current remittance flows and rising reserves offer temporary relief, lasting economic stability requires bold measures to build a robust, export-driven economy and promote sustainable growth. The rupee’s trajectory will hinge on Pakistan’s ability to address these underlying economic vulnerabilities.
