Karachi, April 15, 2024 – The Pakistani Rupee experienced a decline of PKR 0.18 against the US Dollar on Monday, attributed to heightened demand for dollar payments following the Eid ul Fitr holidays.
According to reports from the interbank foreign exchange market, the rupee closed at PKR 278.12 to the dollar, compared to the previous closing rate of PKR 277.94 recorded on April 9, 2024. The extended Eid holidays, coupled with weekly off days, resulted in a five-day hiatus in business activities, leading to increased demand for dollars for post-holiday transactions.
The government had initially announced holidays for Eid ul Fitr from April 10 to April 12, 2024. However, with the inclusion of the weekly off days, the duration of the holidays was prolonged, contributing to the surge in demand for foreign currency.
Currency analysts attribute the depreciation of the rupee to the significant demand for dollars from the import and corporate sectors, which required large quantities of foreign currency to fulfill post-holiday payment obligations. This surge in demand exerted pressure on the rupee’s value against the dollar in the foreign exchange market.
Despite the short-term fluctuations, analysts express confidence in the stability of the rupee in the coming days, citing upcoming talks between Pakistani authorities and the International Monetary Fund (IMF) for a new loan program. The prospect of securing additional financial assistance from the IMF is expected to bolster investor confidence and support the rupee’s resilience against external pressures.
Furthermore, analysts also point to recent developments, such as the repayment of $1 billion by the State Bank of Pakistan (SBP) against international bonds, as contributing factors to the depreciation of the rupee. However, despite these repayments, Pakistan maintains confidence in its foreign exchange reserves, ensuring that it has sufficient buffer stock to meet its foreign obligations.
Pakistan’s foreign exchange reserves have remained robust, providing a cushion against external economic challenges and contributing to the country’s economic stability. The prudent management of foreign reserves by the SBP has helped to mitigate risks associated with external debt repayments and fluctuations in global financial markets.
As the country navigates through post-holiday economic activities and engages in discussions with international financial institutions, stakeholders will closely monitor developments in the foreign exchange market. The government’s efforts to maintain a stable currency exchange rate and secure financial assistance from multilateral organizations will play a crucial role in sustaining investor confidence and fostering economic growth in Pakistan.
