Karachi, August 21, 2024 – The Pakistani rupee continued its downward trend on Wednesday, shedding 18 paisas against the US dollar, closing at PKR 278.52 in the interbank foreign exchange market.
This depreciation follows the previous day’s close at PKR 278.34, reflecting the growing demand for the dollar due to increased import payment obligations.
Currency experts attributed the latest dip in the rupee’s value to the rise in dollar demand for settling import payments. The spike in demand comes at a time when importers are rushing to meet their financial commitments, thereby exerting pressure on the local currency.
In addition to the surge in import payment demands, experts have also pointed to a recent internet disruption that has negatively impacted the export of IT and IT-related services. The disruption in digital connectivity has led to delays in payments and transactions, which has further strained the rupee.
However, despite the rupee’s recent depreciation, currency experts remain optimistic about its stability in the near future. This optimism is primarily driven by a sharp reduction in the current account deficit for July 2024, which shrank by a staggering 78%. The deficit fell from $741 million in July 2023 to just $162 million in July 2024. The significant decrease is attributed to strong export performance and a surge in remittances, both of which have provided crucial support to the rupee.
The State Bank of Pakistan (SBP) has also reported a substantial increase in the country’s foreign exchange reserves, further bolstering confidence in the rupee’s prospects. As of the week ending August 9, 2024, the reserves had risen by $173 million, reaching $14.65 billion, up from the previous week’s $14.472 billion. Notably, the SBP’s official reserves saw an increase of $119 million, bringing the total to $9.272 billion.
These positive economic indicators have led analysts to believe that the rupee’s outlook remains stable in the short term, despite the recent volatility. The substantial reduction in the current account deficit and the increase in foreign exchange reserves have provided a much-needed cushion for the rupee, which is expected to help stabilize its value against the dollar in the coming days.
The market will closely monitor these developments, with hopes that the rupee will regain some of its lost ground, supported by favorable economic trends and government efforts to manage external pressures effectively.
