Karachi, January 24, 2024 – In a welcome turn of events, the Pakistani Rupee (PKR) demonstrated resilience and gained PKR 0.12 against the US dollar on Wednesday, reaching PKR 279.67 in the interbank foreign exchange market.
This positive shift from the previous day’s closing of PKR 279.79 is being attributed to a confluence of factors, reinforcing confidence in the country’s economic stability.
Currency experts are pointing to the injection of funds from international sources, particularly the substantial $700 million from the International Monetary Fund (IMF), as a primary driver of this upward trajectory. The financial support, coupled with sound fiscal policies, has shielded the Pakistani currency from the uncertainties prevailing in the global economic landscape.
A significant ripple effect of these developments is visible in the surge of Pakistan’s foreign exchange reserves. According to the State Bank of Pakistan (SBP), reserves witnessed an impressive increase of $36 million, reaching $13.257 billion by the week ending January 5, 2024, compared to $13.221 billion recorded on December 29, 2023.
While this increase in reserves is certainly positive, economic analysts emphasize the importance of a comprehensive perspective. Reserves, despite the improvement, still remain below the levels observed in August 2021, underscoring the need to closely monitor the trajectory of Pakistan’s reserves to comprehend the factors influencing this positive trend.
Experts highlight several contributing factors to the strengthening of the Rupee, including a narrowing trade deficit and a decline in the import bill. In the first half of fiscal year 2023-24 (July – December), the import bill witnessed a substantial decrease of 16.28 percent, dropping from $31.21 billion in the corresponding period of the previous fiscal year to $26.13 billion.
Conversely, the country experienced positive growth in exports, with a commendable increase of 5.17 percent during the same period. Exports rose to $14.98 billion, up from $14.24 billion in the previous fiscal year, resulting in a substantial contraction of the trade deficit by 34.79 percent, reducing it from $16.96 billion to $11.15 billion in the first half of fiscal year 2023-24.
The combination of increased foreign exchange reserves, a shrinking trade deficit, and a reduced import bill signals robust economic performance for Pakistan, instilling confidence in the financial markets. Currency experts anticipate that sustained prudent fiscal policies and effective management of external balances will be pivotal in maintaining the positive momentum of the Pakistani Rupee against the US dollar in the coming months.
As Pakistan navigates the global economic landscape, these indicators paint a promising picture for the nation’s economic stability and resilience. The strengthening Rupee not only reflects the impact of recent international financial support but also showcases the effectiveness of domestic economic measures, positioning Pakistan as a resilient player in the ever-changing global economic scenario. Investors and analysts are keenly observing the trajectory, hopeful that Pakistan’s economic progress continues to chart an upward course.
