Karachi, January 13, 2025 – The Pakistani rupee began the week on a weaker note, losing 10 paisas against the US dollar due to increased demand for foreign payments typically observed at the start of the week. By the end of Monday’s trading session, the rupee closed at PKR 278.68 per dollar in the interbank market, slightly down from Friday’s closing rate of PKR 278.58.
Currency experts cited the rise in demand for the dollar, driven by import and corporate payment requirements, as the primary factor behind the depreciation. They noted that while the rupee continues to face downward pressure due to dwindling foreign exchange reserves, a surge in remittances has provided intermittent support, partially offsetting the currency’s weakness. This mixed performance highlights the ongoing economic challenges confronting Pakistan.
According to the State Bank of Pakistan (SBP), the country’s net foreign exchange reserves dropped by $31 million during the week ending January 3, 2025. Total reserves now stand at $16.378 billion, compared to $16.409 billion recorded the previous week. The steady decline in reserves has intensified pressure on the rupee, signaling an urgent need for strategic economic measures to stabilize the currency.
Despite these challenges, remittances from overseas Pakistanis have played a pivotal role in mitigating the rupee’s decline. During the first half of the fiscal year 2024-25 (July–December), remittance inflows reached $17.85 billion, reflecting an impressive 38% year-on-year increase from $13.44 billion during the same period last fiscal year. This robust growth underscores the vital contribution of the Pakistani diaspora to the country’s economy.
However, the rising import bill continues to erode the rupee’s value. Data from the Pakistan Bureau of Statistics (PBS) revealed a 17.44% increase in imports for December 2024, with the monthly import bill climbing to $5.29 billion from $4.50 billion in November. This surging demand for dollars to meet import obligations remains a significant challenge, further exacerbating pressure on the rupee.
The delicate interplay between remittance inflows, dwindling reserves, and mounting imports will play a crucial role in determining the rupee’s trajectory in the months ahead. Policymakers face the critical task of implementing reforms to boost foreign reserves and address the persistent dollar demand to achieve sustainable economic stability.