Karachi, April 3, 2024 – The Pakistani Rupee witnessed a decline of PKR 0.08 against the US dollar in interbank trading on Wednesday, reflecting heightened demand for foreign currency to fulfill import obligations.
The rupee closed at PKR 277.92 to the dollar, slipping from the previous day’s closing rate of PKR 277.84 in the interbank foreign exchange market. Analysts in the foreign currency market attributed this depreciation to increased demand for dollars, particularly for import and corporate payments.
Foreign companies operating in Pakistan were noted to be purchasing dollars to repatriate quarterly profits and dividends to their parent companies abroad, adding pressure to the local currency. Additionally, a rise in import payments contributed to the heightened demand for the dollar.
According to data from official sources, import payments surged by 9.25 percent to $4.73 billion in March 2024 compared to $4.33 billion in February 2024. This uptick in import payments indicated a growing need for foreign currency to finance imports, further impacting the exchange rate.
However, despite the recent depreciation, the rupee had experienced gains against the dollar over the past couple of weeks, largely due to a decline in overall imports during the first nine months of the current fiscal year.
The Pakistan Bureau of Statistics (PBS) reported a notable increase in exports, with a growth rate of 9 percent during the first nine months (July – March) of the fiscal year 2023-24. Exports during this period reached $22.91 billion, up from $21.04 billion in the corresponding months of the previous fiscal year.
Moreover, the trade deficit of the country witnessed a significant reduction of 25 percent during the same period, standing at $17.03 billion compared to $22.69 billion in the corresponding months of the previous fiscal year. This reduction was primarily attributed to a decrease in the import bill, which fell by 8.65 percent to $39.94 billion during July – March 2023-24, compared to $43.72 billion in the same period of the previous fiscal year.
Analysts expressed optimism regarding the stability of the rupee, citing improvements in the country’s foreign exchange reserves. According to the State Bank of Pakistan (SBP), the country’s foreign exchange reserves increased by $37 million for the week ending March 22, 2024. Reserves surged to $13.428 billion, up from $13.391 billion in the previous week, reflecting positive developments in Pakistan’s balance of payments and bolstering confidence in the nation’s economic outlook.
As Pakistan continues to navigate its economic landscape, developments in foreign exchange markets will remain closely monitored by stakeholders, with efforts aimed at maintaining stability and fostering sustainable growth.
