Karachi, January 6, 2025 – The Pakistani rupee experienced a modest decline of 6 paisas against the US dollar on Monday, closing at PKR 278.62, compared to last Friday’s closing of PKR 278.56 in the interbank foreign exchange market.
The slight depreciation is primarily attributed to heightened demand for dollars, driven by import payments at the start of the trading week.
Currency experts noted that the rupee’s weakened position is a result of increased dollar demand, particularly on the first trading day of the week, as businesses and industries typically make import payments to meet their obligations. Additionally, the rise in the country’s import bill further contributed to the pressure on the rupee. According to data from the Pakistan Bureau of Statistics (PBS), the import bill rose by 17.44%, with imports reaching $5.29 billion in December 2024, up from $4.50 billion in November 2024. This sharp increase in imports has led to heightened demand for dollars, thereby putting downward pressure on the Pakistani rupee.
The weakening of the rupee was also compounded by a decline in Pakistan’s foreign exchange reserves. As of December 20, 2024, reserves dropped by $262 million, from $16.633 billion to $16.371 billion. This reduction in reserves could potentially limit the central bank’s ability to stabilize the rupee in the short term, adding to the currency’s volatility.
However, despite the recent pressure on the rupee, there have been positive developments in the country’s external accounts. Between July and November 2024, Pakistan recorded a current account surplus of $944 million, a notable shift from the $1.68 billion deficit during the same period in 2023. This improvement in the current account balance signals a positive adjustment in Pakistan’s economic structure and has provided some support for the rupee.
Additionally, remittances from overseas Pakistanis have surged by 34%, amounting to $14.77 billion in the first five months of the fiscal year 2024-25, compared to $11.05 billion during the same period the previous year. This significant rise in remittances has eased the country’s external financial pressures, helping to maintain liquidity and bolster confidence in the domestic currency.
Looking ahead, the rupee’s performance will continue to be influenced by global economic conditions, domestic inflation, and the ongoing demand for imports. The central bank’s policy actions will be key in managing the currency’s stability in the coming months.