Karachi, September 30, 2024 – The Pakistani rupee weakened against the US dollar on Monday, slipping by 7 paisas, as the market faced rising demand for foreign currency due to import and corporate payments. The rupee ended the day at PKR 277.71 per US dollar, down from the previous trading day’s closing of PKR 277.64, reflecting the impact of increased dollar demand on the interbank foreign exchange market.
Currency analysts attributed the slight depreciation to a surge in dollar demand from importers and corporations. As the first trading day of the week, it saw a noticeable increase in transactions, particularly for imports and settlement of corporate obligations. Additionally, the end of the first quarter of the fiscal year added to the pressure, with many corporations remitting profits and dividends to their parent companies abroad.
“This trend is not unusual. Typically, at the start of the week, we see heightened demand for the dollar as businesses resume activity. This time, however, the demand was further amplified by corporate settlements, which naturally weighed on the rupee,” said a senior currency analyst at a leading bank.
Despite this temporary slide, analysts were optimistic about the rupee’s medium-term outlook. Many believed the local currency would stabilize in the coming days due to expected inflows from international financial institutions.
Pakistan recently received over $1 billion as part of the first tranche from the International Monetary Fund (IMF) under its $7 billion Extended Fund Facility (EFF) program. This disbursement is expected to provide some breathing room to Pakistan’s foreign exchange reserves, which had been under considerable pressure in recent months due to ballooning import bills and external debt repayments.
“The disbursement from the IMF provides a crucial buffer for Pakistan’s foreign exchange reserves. This should help stabilize the rupee in the short to medium term, particularly as it boosts confidence in the market,” an analyst noted.
While Monday’s depreciation was marginal, currency experts advised businesses to remain cautious as fluctuations in the rupee’s value are likely to continue until further inflows from multilateral lenders and friendly nations materialize. For now, however, the currency is expected to maintain relative stability amid ongoing IMF support and other foreign funding commitments.
The currency market will continue to keep a close eye on upcoming economic developments, including the government’s fiscal policies and external financing deals, which will play a crucial role in determining the rupee’s future direction.
