Karachi, February 7, 2024 – The Pakistani Rupee (PKR) continued its upward trajectory against the US dollar on Wednesday, closing at PKR 279.34 in the interbank foreign exchange market.
This marks a gain of PKR 0.08 from the previous day’s closing rate of PKR 279.42, highlighting the resilience of the local currency in the face of economic challenges.
Currency experts have pointed out that the Rupee’s strength against the dollar is particularly noteworthy given the recent decline in foreign exchange reserves. According to data released by the State Bank of Pakistan (SBP), weekly reserves decreased by $78 million, falling from $13.341 billion to $13.263 billion for the week ending January 26, 2024.
Despite these concerns, the Rupee has managed to hold its ground, thanks in part to lower import demands and increased corporate transactions. Economists attribute the stability to a combination of factors, including a substantial $700 million injection from the International Monetary Fund (IMF), effective fiscal strategies, and a favorable trade balance.
The infusion of funds, particularly the significant support from the IMF, has played a pivotal role in enhancing Pakistan’s balance of payments and stabilizing the exchange rate. This financial support has come at a crucial time, mitigating the impact of declining foreign exchange reserves.
Fiscal policies have also played a crucial role in the Rupee’s stability. The first half of the fiscal year 2023-24 witnessed a remarkable 16.28 percent reduction in the import bill, dropping from $31.21 billion to $26.13 billion. In contrast, exports experienced a commendable 5.17 percent increase, reaching $14.98 billion. As a result, the trade deficit contracted by 34.79 percent, falling from $16.96 billion to $11.15 billion during the same period.
The positive trade balance and effective fiscal policies have provided a buffer against economic challenges, contributing to the Rupee’s resilience. While the injection of funds and prudent fiscal strategies have been instrumental in maintaining stability, economists and policymakers remain vigilant.
The decline in foreign exchange reserves serves as a reminder of the ongoing economic concerns faced by Pakistan. Analysts emphasize the importance of sustainable strategies to ensure long-term currency and economic stability. Policymakers are urged to address the underlying issues, promote economic growth, and diversify revenue streams to build a robust and resilient economy.
As the situation evolves, the Pakistani business community, investors, and the general public continue to watch closely, hoping for sustained economic recovery and a stable currency in the months ahead.
