Karachi, January 30, 2024 – In a positive turn of events, the Pakistani Rupee (PKR) strengthened by PKR 0.09 against the US dollar on Tuesday, reaching PKR 279.55 in the interbank foreign exchange market.
This upward trend marks a significant improvement from the previous day’s closing rate of PKR 279.64 to the dollar.
The recent surge in the exchange rate can be attributed to a combination of factors contributing to an enhanced balance of payments in the country. Notably, a substantial injection of funds, including $700 million from the International Monetary Fund (IMF), has played a pivotal role in this positive development.
The infusion of international funds, coupled with robust fiscal policies, has proven effective in stabilizing the Pakistani currency amid uncertainties in the global economic landscape. An encouraging outcome of these initiatives is the noteworthy increase in Pakistan’s foreign exchange reserves.
According to the State Bank of Pakistan (SBP), reserves witnessed an impressive boost 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 is positive, analysts emphasize the importance of a comprehensive perspective, noting that reserves still fall behind the levels observed in August 2021.
Experts attribute the strengthening of the Rupee to various factors, 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 experienced a substantial decrease of 16.28 percent, dropping from $31.21 billion to $26.13 billion.
In contrast, the country witnessed positive growth in exports, with a commendable increase of 5.17 percent during the same period, reaching $14.98 billion. This surge in exports, combined with a 34.79 percent contraction of the trade deficit, from $16.96 billion to $11.15 billion in the first half of fiscal year 2023-24, contributes to the overall robust economic performance for Pakistan.
The combination of increased foreign exchange reserves, a shrinking trade deficit, and a reduced import bill instills confidence in the financial markets. Currency experts anticipate that ongoing prudent fiscal policies and effective management of external balances will be crucial in maintaining the positive momentum of the Pakistani Rupee against the US dollar in the upcoming months.
As Pakistan navigates the global economic landscape, these indicators present an optimistic outlook for the nation’s economic stability and resilience, showcasing the effectiveness of both recent international financial support and domestic economic measures. Investors and analysts are closely monitoring this trajectory, optimistic about the continued upward trajectory of Pakistan’s economic progress.
