Karachi, February 20, 2024 – The Pakistani Rupee (PKR) experienced a decline of PKR 0.21 against the US dollar on Tuesday, reflecting demand pressure for foreign payments.
The local currency concluded at PKR 279.57 to the dollar, compared to the previous day’s closing rate of PKR 279.36 in the interbank foreign exchange market.
Currency experts attribute the depreciation of the rupee to an increase in the demand for foreign currency, particularly for import and corporate payments. While the rupee had remained relatively stable against the greenback for the past few weeks, analysts had been cautioning about the potential impact of ongoing political turmoil on the country’s repayment capacity, which could lead to currency fluctuations.
The State Bank of Pakistan (SBP) recently disclosed that the country’s foreign exchange reserves experienced a notable uptick, rising by $51 million in the week ending February 9, 2024. This positive development saw Pakistan’s total foreign exchange reserves reach $13.149 billion, marking an increase from the $13.098 billion recorded just a week earlier on February 2, 2024.
Although these reserve levels may not yet match the robust figures observed in August 2021, the consistent climb in reserves signals a positive trajectory and offers glimpses of economic stability. The increase in foreign exchange reserves is a crucial indicator for the economic health of a country, reflecting its ability to meet external payment obligations and withstand potential shocks.
The demand pressure on the Pakistani Rupee underscores the importance of monitoring economic indicators closely, especially in a global context where various factors, including political unrest, can influence currency movements. While the recent uptick in foreign exchange reserves provides a positive signal, the potential impact of ongoing political challenges on the rupee’s stability remains a concern for market participants.
It is imperative for policymakers and financial institutions to adopt measures that enhance economic resilience, attract foreign investment, and ensure stability in currency markets. Addressing the root causes of demand pressure and maintaining a balanced approach to fiscal and monetary policies will be crucial in safeguarding the Pakistani economy against external shocks.
As the situation evolves, market participants will closely watch for developments in the foreign exchange market, and policymakers will need to respond with prudent measures to ensure the continued stability of the Pakistani Rupee and foster a conducive environment for economic growth.