Karachi, March 13, 2024 – In a surprising turn of events, the Pakistani Rupee (PKR) exhibited resilience by strengthening against the US dollar, marking an increase of PKR 0.29.
This positive development unfolded on Wednesday despite heightened foreign currency demand for import and corporate payments. The interbank foreign exchange market saw the rupee closing at PKR 278.79 to the dollar, an improvement from the closing rate on March 11, 2024, which was PKR 279.08.
One noteworthy aspect of this strengthening is that the banks remained closed on the preceding day for Zakat deductions. However, the rupee experienced significant gains as the foreign exchange market reopened after the one-day hiatus.
Currency market analysts attribute this unexpected surge to improved inflows from foreign remittances and export receipts. The State Bank of Pakistan (SBP) reported a substantial 13 percent Year-on-Year (YoY) growth in workers’ remittances during February 2024. According to the central bank’s data, remittances soared to $2.25 billion in February, a notable increase from the $1.99 billion recorded in the same period the previous year. This surge in remittances is seen as a positive indicator for the country’s economic health.
In addition to remittances, the country’s exports witnessed a commendable 9 percent increase during the period of July to February 2023-24. Export figures climbed to $20.35 billion in the first eight months of the current fiscal year, reflecting growth from the $18.67 billion recorded in the corresponding period of the last fiscal year. This surge in export revenue not only contributes to the strengthening of the rupee but also augurs well for the overall economic landscape.
However, currency experts express concern about the decline in foreign exchange reserves, cautioning that this factor might exert pressure on the rupee’s value in the coming days. Weekly data from the State Bank of Pakistan indicates a decrease of $19 million in the net foreign exchange reserves as of March 1, 2024. The combined reserves now stand at $13.02 billion, compared to the $13.039 billion recorded a week earlier.
While the current strengthening of the rupee is a positive development, experts emphasize the need for a careful monitoring of the foreign exchange reserves, as any sustained decrease could potentially impact the stability of the currency. The government and financial authorities are likely to closely observe these trends to formulate strategies that ensure a balance between economic growth and currency stability in the foreseeable future.
