Karachi, December 23, 2024 – The Pakistani rupee depreciated by 15 paisas against the US dollar on Monday, as increased demand for the greenback weighed on the local currency. The rupee closed at PKR 278.57 per dollar in the interbank market, compared to last Friday’s closing of PKR 278.42 per dollar.
Currency experts cited heightened year-end demand for dollars, particularly for import and corporate payments, as the primary reason behind the rupee’s decline. This seasonal surge in foreign payment requirements has temporarily put pressure on the local currency.
Despite this slight depreciation, analysts maintain a cautiously optimistic outlook for the rupee, pointing to improving economic indicators and foreign inflows that could provide much-needed support. The State Bank of Pakistan (SBP) recently reported a rise in the country’s total liquid foreign exchange reserves, which reached $16.633 billion as of December 13, 2024, reflecting a modest increase of $32 million from the previous week. Of this, the SBP’s reserves stood at $12.082 billion, slightly down from the prior week’s $12.51 billion, indicating a gradual recovery.
Encouragingly, Pakistan’s external sector has shown significant improvement. The country recorded a current account surplus of $944 million during the first five months of fiscal year 2024-25 (July-November), a sharp turnaround from the $1.68 billion deficit reported in the same period last year. This remarkable progress is attributed to better trade balances and higher foreign inflows.
Another crucial factor supporting the rupee is the strong growth in remittances from overseas Pakistanis. Between July and November 2024, remittances surged by 34% year-on-year, totaling $14.77 billion, compared to $11.05 billion during the same period in 2023. This robust inflow of foreign currency has eased external financial pressures, enhanced domestic liquidity, and offered a stabilizing influence on the rupee’s performance.
While short-term challenges persist due to rising dollar demand, the medium-term outlook for the rupee remains positive, underpinned by improving economic fundamentals and steady foreign exchange inflows. These factors are expected to help stabilize the currency in the coming months.