Karachi, October 31, 2024 – The Pakistani rupee closed at PKR 277.85 against the US dollar on Thursday, reflecting a slight decline due to rising foreign payment obligations. The rupee dropped by 6 paisas from the previous day’s closing rate of PKR 277.79 in the interbank market.
Currency analysts attribute the depreciation to increased demand for dollars, driven by rising import needs and corporate financial obligations. As local businesses prepare for various international transactions, the heightened demand for foreign currency has exerted downward pressure on the rupee. Nevertheless, experts remain cautiously optimistic about the rupee’s medium-term stability, suggesting that anticipated foreign exchange inflows could support the currency’s value in the coming months.
A recent development that has added a layer of stability is the modest increase in foreign reserves held by the State Bank of Pakistan (SBP). As of October 18, 2024, the SBP reported a $18 million gain in reserves, bringing the total to $11.014 billion. Although this increase is relatively small, it provides a critical buffer in Pakistan’s otherwise challenging economic environment. Analysts note that a steady reserve growth is vital for shielding the economy from external payment pressures and for helping the rupee withstand unpredictable currency fluctuations.
Other economic indicators also suggest potential resilience for the rupee. Improvements in Pakistan’s trade balance and a narrowing current account deficit indicate reduced demand for foreign currency. With a healthier current account and a reduced trade deficit, Pakistan faces less pressure to secure foreign exchange, which could contribute to greater rupee stability. This fiscal progress has also bolstered investor confidence, enhancing the rupee’s standing within the currency markets.
Additionally, ongoing remittance inflows from overseas Pakistanis and a steady rise in export revenues provide further support. Remittances, a key pillar of Pakistan’s economy, generate a reliable source of foreign exchange, reinforcing market stability. Increased export revenues further strengthen the country’s foreign reserves, supporting the rupee’s value.
The outlook for the rupee remains cautiously positive. Although short-term pressures from corporate and import-related dollar demand may lead to occasional dips, a combination of remittance inflows, fiscal improvements, and higher export revenues is creating an environment conducive to rupee stability. If these trends continue, analysts believe the rupee could hold its ground, despite the challenges posed by global economic uncertainties.