Karachi, September 23, 2024 – The Pakistani rupee experienced a minor dip on Monday, closing at PKR 277.87 against the US dollar in the interbank market, slipping by just 3 paisas from last Friday’s rate of PKR 277.84.
The slight depreciation was attributed to a rise in demand for the dollar due to import payments, which often increase at the beginning of the trading week.
Currency market experts pointed to the surge in demand for dollars from importers as the primary reason for the rupee’s soft decline. However, analysts remain optimistic that the rupee will maintain stability in the near future, citing positive macroeconomic factors and Pakistan’s ongoing negotiations with the International Monetary Fund (IMF).
On September 25, 2024, the IMF’s executive board is expected to meet to review Pakistan’s request for a $7 billion loan program. Many believe that approval of this loan will provide much-needed financial relief and reinforce market confidence, helping to stabilize the rupee.
Further supporting this optimistic outlook are Pakistan’s improving economic indicators. Data from the State Bank of Pakistan (SBP) revealed that the country’s foreign exchange reserves grew by $31 million in the week ending September 13, 2024. Reserves now stand at $14.827 billion, up from $14.796 billion recorded a week earlier. This increase in reserves, while modest, is seen as a key factor contributing to the rupee’s relative resilience despite recent pressures.
Another major positive development has been the sharp reduction in Pakistan’s current account deficit (CAD). According to the SBP, the CAD contracted by 81% in the July-August 2024 period, narrowing to just $171 million compared to $893 million during the same period last year. This significant improvement in the balance of payments is seen as a stabilizing factor for the rupee.
“The shrinking CAD is a major win for the rupee. It signals a healthier balance of payments, which reduces pressure on the currency,” explained one currency expert, highlighting how a more balanced trade environment strengthens Pakistan’s foreign exchange market.
Investor sentiment remains buoyant as markets await the IMF decision. Approval of the $7 billion loan would bolster Pakistan’s reserves, providing a vital lifeline for its economy, which has struggled with inflation, rising debt, and external payment pressures.
In light of these positive trends, analysts believe the rupee could see greater stability in the coming months if economic fundamentals continue to improve and foreign financial support materializes.
