Karachi, December 1, 2023 – The Pakistani Rupee (PKR) exhibited resilience on Friday as it strengthened against the US dollar, reaching PKR 284.97 in the interbank foreign exchange market.
This marked a gain of PKR 0.20 from the previous day’s closing rate of PKR 285.17 against the greenback.
Analysts attribute this upward trend to the rollover of a substantial $3 billion deposit by Saudi Arabia. The Kingdom, through the Saudi Fund for Development (SFD), announced the extension of its deposit with the State Bank of Pakistan (SBP) for an additional year. Initially set to mature on December 5, 2023, this extension signifies the ongoing financial support between the two nations, contributing significantly to the positive momentum in the currency market.
The Rupee’s ascent gained further momentum with the announcement of several multibillion-dollar projects between Pakistan and the United Arab Emirates (UAE). Collaborative efforts between the two nations injected optimism into the currency market, playing a pivotal role in the recovery of the Rupee’s value. This development was widely welcomed as a positive step towards strengthening economic ties and fostering stability in the region.
In addition to the collaborative projects and Saudi deposit extension, the Rupee also benefited from an increase in foreign exchange reserves. For the week ending November 24, 2023, Pakistan witnessed a surge of $91 million in its foreign exchange reserves. According to the SBP, the country’s foreign exchange reserves rose to $12.393 billion, compared to $12.302 billion recorded just a week earlier on November 17.
It is crucial to note, however, that Pakistan’s foreign exchange reserves remain significantly lower than their peak level in August 2021, when they reached a robust $27.2 billion.
The State Bank of Pakistan reported a noteworthy increase in its official foreign exchange reserves, rising by $77 million to reach $7.257 billion by the week ending November 24, 2023, in contrast to $7.18 billion reported a week ago. Simultaneously, foreign exchange reserves held by commercial banks also saw an uptick, recording a $14 million increase to reach $5.136 billion by the same week, compared to $5.122 billion a week prior.
The combined impact of the Saudi deposit extension, collaborative projects with the UAE, and the increase in foreign exchange reserves has contributed to the Rupee’s recent strength against the US dollar. This positive trend is viewed as a testament to the resilience of Pakistan’s economy and its ability to attract foreign investments, fostering optimism among investors and market participants. As Pakistan continues to strengthen its economic ties and explore new collaborations, the currency market remains a key indicator of the nation’s financial health and global standing.
