Karachi, August 20, 2024 – The Pakistani rupee appreciated to PKR 278.34 against the US Dollar on Tuesday, bolstered by improved foreign inflows and a shrinking current account deficit.
The rupee gained 10 paisas from the previous day’s closing of PKR 278.44 in the interbank foreign exchange market. Currency analysts attributed this gain to the steady inflow of foreign funds, which have been instrumental in supporting the rupee’s upward trajectory.
A significant contributor to the rupee’s recent performance is the sharp reduction in the current account deficit for July 2024. The deficit shrank by a remarkable 78%, dropping from $741 million in July 2023 to just $162 million in July 2024. This was driven by strong export performance and a surge in remittances, both of which have played a crucial role in stabilizing the currency. Analysts have pointed out that this reduction in the deficit has provided a much-needed cushion for the rupee.
The State Bank of Pakistan (SBP) has also reported a substantial increase in the country’s foreign exchange reserves, which further underpins the rupee’s appreciation. As of the week ending August 9, 2024, the reserves had risen by $173 million, reaching $14.65 billion, up from the previous week’s $14.472 billion. Notably, the SBP’s official reserves saw an increase of $119 million, bringing the total to $9.272 billion.
The positive economic sentiment surrounding these developments has led experts to be optimistic about the rupee’s stability in the near term. The combination of a reduced current account deficit, increased foreign exchange reserves, and robust export receipts signals a favorable outlook for the rupee in the days ahead.
As the country’s economic fundamentals continue to improve, the rupee’s recent gains are expected to hold, providing a much-needed boost to Pakistan’s economic outlook. With significant inflows from exports and remittances, the rupee’s strength is likely to be maintained, supported by ongoing efforts to manage the current account deficit and bolster foreign reserves. This suggests a more resilient economic environment, with potential for further appreciation of the rupee in the coming weeks.
