Karachi, July 18, 2024 – The Pakistani Rupee on Thursday ended down by 6 paisas against the US dollar at the closing of the interbank foreign exchange market.
The rupee closed at PKR 278.17 to the dollar, slightly lower than the PKR 278.11 recorded on July 15, 2024.
Currency analysts attributed the rupee’s decline to the market reopening after two holidays for Moharram. Importers and corporate buyers were actively purchasing dollars to meet foreign obligations, putting pressure on the rupee.
Despite the day’s dip, analysts remain optimistic about the rupee’s stability in the coming days, citing a positive economic outlook bolstered by improved foreign exchange reserves and a recent Staff-Level Agreement (SLA) with the International Monetary Fund (IMF) for a new loan program. The IMF deal has sent positive signals to the market, increasing expectations of foreign inflows, which would bolster the rupee’s value against the dollar.
The State Bank of Pakistan (SBP) reported a notable increase of $72 million in the country’s weekly foreign exchange reserves. As of July 5, 2024, Pakistan’s foreign exchange reserves reached $14.645 billion, up from $14.573 billion the previous week. This positive trend in reserves is a promising indicator of the country’s economic stability.
Breaking down the reserves, the official foreign exchange reserves held by the SBP saw an uptick of $15 million. As of July 5, 2024, the SBP’s reserves stood at $9.405 billion, compared to $9.39 billion the previous week. This modest increase reflects a stable inflow of foreign currency, bolstering the central bank’s capacity to manage external financial obligations.
Further supporting the rupee’s recovery was the substantial inflow of workers’ remittances. According to a report by the SBP released on Tuesday, Pakistan received $30.25 billion in workers’ remittances during the fiscal year 2023-24, marking an 11 percent increase from the $27.33 billion received in the preceding fiscal year. This increase in remittances has provided a critical buffer for the country’s foreign exchange reserves and has positively impacted the exchange rate.
The combination of the IMF loan optimism, improved foreign exchange reserves, and robust remittance inflows has contributed to the rupee’s recovery against the dollar. The coming weeks will be crucial as markets await the finalization of the IMF loan program, which is expected to provide much-needed support to Pakistan’s economy.
As the market continues to react to these developments, the rupee’s performance against the dollar will be closely watched. The improved economic indicators offer a glimmer of hope for a more stable financial landscape in Pakistan.