Karachi, June 24, 2024 – The Pakistani Rupee experienced a depreciation of 11 paisas against the US dollar on Monday, driven by heightened demand for foreign currency to meet import and corporate payment obligations.
The rupee closed at PKR 278.62 per dollar, down from last Friday’s closing of PKR 278.51 in the interbank foreign exchange market.
Currency analysts attributed the rupee’s decline to the typical market pressures encountered at the start of the week, following the weekend break. “Monday usually sees higher demand for dollars due to accumulated import and corporate payment requirements, leading to pressure on the rupee,” explained one analyst.
Despite this depreciation, analysts remain optimistic about the rupee’s stability through the end of June, marking the close of the fiscal year 2023-24. This optimism is bolstered by the recent increase in Pakistan’s foreign exchange reserves. According to the State Bank of Pakistan (SBP), the country’s foreign exchange reserves grew by $31 million over the past week. As of June 14, 2024, the total reserves stood 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 a positive indicator of economic stability and enhances 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.”
Additionally, economic analysts pointed out that recent measures in the 2024-25 budget have supported the rupee by making importers more cautious in placing new orders, thereby reducing immediate dollar demand. This cautious approach, in conjunction with the increase in foreign reserves, has helped mitigate some of the pressures on the rupee.
The SBP’s efforts to boost reserves are seen as a critical factor 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, the market will continue to monitor these factors closely. 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.