Karachi, October 15, 2024 – The Pakistani rupee experienced a slight decline against the US dollar on Tuesday, slipping by 8 paisas due to rising demand for foreign currency to cover import and corporate payments.
The rupee closed at PKR 277.74 to the dollar, compared to the previous day’s rate of PKR 277.66 in the interbank foreign exchange market.
Currency market analysts attributed the rupee’s weakening to higher dollar demand, driven by increased import activity and corporate obligations. The pressures from importers and businesses looking to settle payments in foreign currency continue to weigh on the rupee, particularly as global economic conditions remain fluid.
Despite this modest decline, financial experts remain optimistic about the rupee’s near-term prospects, thanks to improvements in Pakistan’s foreign exchange reserves and other key economic indicators. The latest figures from the State Bank of Pakistan (SBP) show that the country’s total foreign exchange reserves increased to $16.05 billion as of the week ending October 4, 2024, reflecting a $64 million rise from $15.983 billion in the previous week. This boost in reserves is expected to help support the rupee’s value and aid in stabilizing the currency.
In addition to the increase in reserves, Pakistan has seen encouraging developments in its trade balance and current account deficits. Both deficits have narrowed significantly in recent months, reducing the strain on the country’s foreign exchange reserves. This trend has fueled positive sentiment about the rupee’s future performance. “The shrinking of both the trade and current account deficits is a good sign for the rupee’s future stability,” commented a leading currency expert. As these deficits continue to narrow, less pressure is placed on the rupee, reducing the country’s reliance on foreign currency to meet external obligations.
Moreover, the rupee’s position is expected to benefit from increased export receipts and steady inflows of workers’ remittances. Remittances, which play a vital role in supporting Pakistan’s foreign exchange reserves, are projected to remain strong and provide significant backing for the local currency in the coming months.
While the overall outlook for the rupee is cautiously optimistic, market experts have warned that potential risks remain. Changes in global economic conditions and domestic challenges could still affect the rupee’s stability. However, the recent strengthening of reserves and the improving trade dynamics indicate that Pakistan is making positive strides toward stabilizing its currency and economy.