Karachi, January 18, 2024 – The Pakistani Rupee (PKR) demonstrated its resilience in the interbank foreign exchange market on Thursday, reaching PKR 279.98 against the US dollar.
This slight uptick comes after the currency closed at PKR 280.10 the previous day, showcasing a positive trend attributed to various factors contributing to the nation’s economic stability.
A key driver behind the recent surge in the Rupee’s value is the infusion of funds from international sources, particularly the International Monetary Fund (IMF). A substantial injection of $700 million from the IMF has played a pivotal role in bolstering the Rupee, according to currency experts. Coupled with sound fiscal policies, this has shielded the Pakistani currency from the uncertainties prevalent in the global economic landscape.
The positive impact of these developments is evident in the increase in Pakistan’s foreign exchange reserves. The State Bank of Pakistan (SBP) reported a noteworthy rise of $36 million, bringing the total reserves to $13.257 billion by the week ending January 5, 2024, compared to $13.221 billion recorded on December 29, 2023.
While the recent surge in reserves is a positive indicator, economic analysts emphasize the need to consider the broader context. Despite the improvement, the reserves are still below the levels observed in August 2021. Monitoring Pakistan’s reserve trajectory remains crucial to understanding the factors shaping the recent positive trend.
Experts point to several factors fortifying 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 decreased significantly by 16.28 percent, falling 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. This led to 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.
