Karachi, September 18, 2024 – The Pakistani rupee strengthened to PKR 278.04 against the US dollar on Wednesday, reflecting an improvement in economic conditions.
The currency gained nine paisas compared to the previous closing rate of PKR 278.13 on September 16, 2024, in the interbank foreign exchange market.
According to currency analysts, the rupee made gains despite the high demand for dollars due to import payments. The market reopened after a public holiday on September 17, which initially exerted pressure on the rupee. However, favorable economic indicators, such as lower international oil prices, supported the local currency’s appreciation.
One of the main drivers behind the rupee’s strength is the growing optimism surrounding Pakistan’s potential loan approval from the International Monetary Fund (IMF). The IMF announced that its executive board would review Pakistan’s loan program on September 25, 2024. Market participants are hopeful that the review will lead to the release of a $7 billion bailout package for Pakistan’s struggling economy.
“The anticipation of the IMF loan approval has been a key factor in the rupee’s recent performance,” said a senior currency trader in Karachi. “Investors are optimistic that the funds will help stabilize the economy and reduce pressure on foreign exchange reserves.”
In addition to the positive sentiment surrounding the IMF, an improvement in Pakistan’s foreign exchange reserves has further bolstered the rupee. Data from the State Bank of Pakistan (SBP) indicated that foreign exchange reserves rose by $56 million in the week ending September 6, 2024, bringing the total reserves to $14.796 billion. This represents an increase from the previous week’s figure of $14.74 billion, reported on August 30.
Breaking down the reserve figures, the SBP’s own reserves increased by $30 million, reaching $9.467 billion, while reserves held by commercial banks grew by $26 million, from $5.303 billion to $5.329 billion during the same period.
Experts suggest that if the IMF executive board approves the loan, the rupee may continue its upward trend. However, analysts also warned that the currency remains vulnerable to external factors such as geopolitical developments and fluctuations in global commodity prices, especially oil. These variables could significantly impact Pakistan’s import bill and foreign exchange reserves, posing risks to the rupee’s stability in the future.
