Karachi, September 25, 2024 – The Pakistani rupee experienced a slight decline of 5 paisas against the US dollar on Wednesday, closing at PKR 277.85 in the interbank foreign exchange market, compared to the previous day’s PKR 277.80. The drop was attributed to a surge in demand for import payments, as importers rushed to place orders with foreign suppliers ahead of the quarter’s end.
Currency experts explained that importers were seeking to secure supplies before the close of the fiscal quarter, adding pressure on the rupee. However, despite this dip, market sentiment toward the rupee remains cautiously optimistic, with stability expected due to the anticipated approval of a loan program from the International Monetary Fund (IMF).
The potential IMF assistance is seen as crucial for Pakistan, which continues to battle a host of economic challenges, including surging inflation, ballooning debt, and a widening fiscal deficit. An agreement with the IMF would not only provide much-needed financial inflows but also help stabilize the economy by boosting foreign exchange reserves and alleviating some of the pressures weighing on the rupee.
In the days leading up to the IMF’s decision, Pakistan’s economic indicators have shown marginal signs of improvement. The State Bank of Pakistan (SBP) recently reported a slight increase in foreign exchange reserves, with a rise of $31 million during the week ending September 13, 2024. This brings the country’s reserves to $14.827 billion, up from $14.796 billion the previous week. Though the increase is modest, it is still seen as a positive development, reflecting the rupee’s resilience amid both global and domestic economic challenges.
A significant contributor to this relative stability has been the sharp reduction in Pakistan’s current account deficit (CAD). According to data from the SBP, the CAD shrank by 81% in the July-August 2024 period, falling to $171 million from $893 million in the same period last year. This reduction in the CAD is a welcome sign for Pakistan’s economic outlook, as it suggests an improved balance of payments and less strain on foreign exchange reserves.
“The shrinking current account deficit is a major factor supporting the rupee,” noted a leading currency expert. “It signals a healthier trade balance, reducing the pressure on foreign reserves and helping to sustain the local currency.”
As Pakistan awaits the IMF’s decision, hopes are high that the agreement will provide much-needed relief to the economy, contributing to greater stability for the rupee in the months ahead.
