Karachi, October 3, 2024 – The Pakistani rupee weakened against the US dollar on Thursday, slipping by 10 paisas in the interbank foreign exchange market. The local currency closed at PKR 277.74 to the dollar, compared to the previous day’s rate of PKR 277.64. The depreciation is primarily attributed to rising import payment demands, particularly for oil, driven by escalating geopolitical tensions.
Currency analysts noted that the increase in global geopolitical risks, especially in key oil-producing regions, has triggered a surge in international oil prices. As Pakistan is a net importer of petroleum products and crude oil, this has led to higher demand for the US dollar to settle import payments, placing downward pressure on the rupee.
“The rupee’s decline is mainly due to increased demand for dollars to cover import payments for oil, which has been impacted by the volatile geopolitical landscape,” said one market expert. “The global rise in crude oil prices is adding strain to Pakistan’s import bill, thereby driving up the demand for dollars.”
Despite the short-term decline, experts remain cautiously optimistic about the rupee’s outlook. They highlighted several factors that could provide support to the currency in the coming weeks, including recent inflows from the International Monetary Fund (IMF), sustained remittances from Pakistanis abroad, and an increase in export receipts.
“The support from the IMF, combined with remittances and export earnings, will help stabilize the rupee in the medium term,” said another analyst. “These inflows are crucial for meeting foreign exchange needs and easing the pressure on the currency.”
In addition, Pakistan’s narrowing current account deficit and trade deficit have been favorable for the rupee. In recent months, improved fiscal management and efforts to curtail unnecessary imports have contributed to a healthier balance of payments, providing some relief to the currency.
Looking ahead, analysts predict that while the rupee may face periodic pressure due to external shocks, such as fluctuations in global oil prices and geopolitical uncertainties, the domestic economy’s improving fundamentals should help the currency maintain a degree of stability.
Traders and investors will be closely watching for further developments in the global economy and any shifts in Pakistan’s external financing that could impact the rupee-dollar exchange rate in the near future.