Karachi, July 8, 2024 – On Monday, the Pakistani Rupee weakened against the US dollar by 12 paisas, driven by high foreign currency demand at the beginning of the week.
The rupee closed at PKR 278.50 to the dollar, compared to last Friday’s closing rate of PKR 278.38 in the interbank foreign exchange market.
Currency experts attribute the rupee’s pressure against the greenback to the first trading day of the week, which typically sees increased dollar demand for import and corporate payments. However, analysts remain optimistic about the rupee’s stability in the coming days due to a rise in foreign exchange reserves and promising trade figures for the fiscal year ending June 30, 2024.
Last week, the State Bank of Pakistan (SBP) reported a substantial increase of $494 million in its official foreign exchange reserves for the week ending June 28, 2024. This brought the total reserves of the central bank to $9.39 billion by the end of June 2024, up from $8.896 billion a week earlier on June 21, 2024. This rise underscores a strengthening of Pakistan’s external financial position amid ongoing economic developments.
The SBP attributed the increase in reserves primarily to inflows from various multilateral agencies, reflecting growing confidence and support from international financial entities towards Pakistan’s economic stability and growth prospects.
Market analysts also highlight other factors contributing to the rupee’s potential recovery, including a notable increase in exports and a slight decline in imports during the fiscal year 2023-24. According to data released by the Pakistan Bureau of Statistics (PBS), Pakistan’s exports saw robust growth of 10.54 percent, reaching $30.65 billion in FY24 compared to $27.72 billion in the previous fiscal year.
Conversely, the import bill for Pakistan recorded a modest decrease of 0.84 percent, amounting to $54.73 billion in FY24 from $55.20 billion in FY23. This narrowing of the trade deficit, which contracted by 12.32 percent to $24.09 billion in FY24 from $27.47 billion in the previous fiscal year, signifies positive developments for Pakistan’s balance of payments and overall economic stability.
The combination of increased foreign exchange reserves, boosted by multilateral support, alongside improved export performance and controlled import expenditure, has reinforced market sentiment and contributed to the rupee’s recent appreciation against the dollar.
In conclusion, while the rupee experienced a slight dip against the dollar at the start of the week, the broader economic indicators suggest a potential stabilization and recovery in the near future, driven by stronger foreign exchange reserves and improved trade dynamics.