Karachi, October 22, 2024 – The Pakistani rupee weakened by 5 paisas against the US dollar on Tuesday, as rising external payments put pressure on the currency. The rupee closed at PKR 277.74 per US dollar in the interbank market, compared to the previous day’s closing of PKR 277.69.
Currency experts attributed the slight depreciation to an increase in dollar demand, driven by import and corporate payment requirements. With political stability improving, demand for raw materials needed in local manufacturing has surged, further elevating the need for foreign currency.
Despite this recent dip, financial analysts remain optimistic about the rupee’s near-term performance, citing improving economic indicators. A significant factor contributing to this optimism is the gradual improvement in Pakistan’s foreign exchange reserves. According to the latest data from the State Bank of Pakistan (SBP), the country’s net foreign reserves rose by $64 million during the week ending October 10, 2024, bringing total reserves to $16.111 billion, up from $16.047 billion the previous week.
The increase in reserves primarily came from the SBP’s own holdings, which grew by $215 million, rising from $10.808 billion to $11.023 billion. This development is being seen as a positive sign for the country’s economic stability. A stronger reserve position not only provides a financial buffer against external economic challenges but also reduces the country’s dependence on foreign borrowing.
Financial experts have welcomed this improvement, suggesting that the rise in reserves will help alleviate the downward pressure on the rupee. “This increase in reserves is a step towards stabilizing the rupee,” said a senior financial analyst. “With stronger reserves, Pakistan is better equipped to manage external economic shocks, enhancing market confidence in the rupee’s future.”
In addition to higher reserves, other factors such as an improving trade balance and a narrowing current account deficit have also contributed to the rupee’s stability. Both deficits have contracted in recent months, reducing the need for foreign currency to cover international payments.
Furthermore, steady inflows from workers’ remittances and an increase in export growth have supported the rupee’s stability. While short-term fluctuations are expected, the combination of these factors suggests a favorable outlook for the rupee’s performance in the near future.