The Pakistani rupee weakened against the US dollar, closing at PKR 278.40 in the interbank foreign exchange market on Thursday, May 16, 2024.
This decline of 14 paisas from the previous day’s closing rate of PKR 278.26 has drawn attention from currency analysts, who attribute it to escalating demand for the dollar, primarily driven by import and corporate payments.
The business community’s accelerated import orders, in anticipation of potential rises in duties and taxes in the upcoming budget for the fiscal year 2024-25, have reportedly contributed to the increased demand for the dollar, further pressuring the rupee.
Despite these short-term fluctuations, experts express optimism about the exchange rate stabilizing by June 30, 2024. This optimism is buoyed by the significant improvement in Pakistan’s foreign exchange reserves, as indicated by recent data released by the State Bank of Pakistan (SBP).
The SBP disclosed that as of May 3, 2024, Pakistan’s foreign exchange reserves surged to $14.459 billion, primarily due to a $1.1 billion disbursement by the International Monetary Fund (IMF) under its Stand-By Arrangement (SBA) program. This injection of funds has bolstered Pakistan’s economic stability, providing a crucial buffer against external financial pressures.
Simultaneously, Pakistan has made concerted efforts to stabilize its economy, resulting in a notable reduction in the trade deficit. Data from the Pakistan Bureau of Statistics (PBS) indicates a 17% year-on-year decrease for the first ten months of fiscal year 2024, shrinking from $23.54 billion to $19.51 billion. This decline is viewed as instrumental in fortifying the nation’s fiscal health.
Moreover, Pakistan’s export sector has demonstrated resilience, recording a commendable growth of 9.10% to reach $25.28 billion compared to the previous fiscal year’s $23.17 billion. Strategic pricing adjustments and successful market expansion initiatives have propelled this growth, highlighting Pakistan’s efforts to enhance export competitiveness.
An official from the Ministry of Commerce emphasized the significance of these achievements, stating, “Exports play a pivotal role in foreign exchange earnings, employment generation, and industrial growth. Our efforts to enhance export competitiveness are yielding positive results amidst global economic challenges.”
Furthermore, the SBP has noted an overall improvement in reserves, with a $36 million increment in the week ending April 26, bringing the total to $13.32 billion. The SBP’s share of these reserves stood at $8.006 billion.
As Pakistan continues to navigate economic challenges, the uptick in foreign exchange reserves, coupled with positive trade indicators, offers a ray of hope for sustained economic stability and growth. The slight fluctuation in the Pakistani Rupee against the dollar underscores the resilience of Pakistan’s economy amidst global uncertainties.
