Karachi, November 18, 2024 – The Pakistani rupee depreciated against the US dollar on Monday, reaching PKR 277.86, driven by heightened foreign currency demand primarily for import payments. The rupee lost 19 paisas compared to last Friday’s closing rate of PKR 277.67 in the interbank foreign exchange market.
Currency analysts attributed the drop to the typical surge in dollar demand at the beginning of the week, as businesses and industries make payments for imports. This trend is a common occurrence, leading to temporary pressure on the rupee. Despite the drop, analysts remain optimistic about the rupee’s stability in the near term, citing the current account surplus reported by the State Bank of Pakistan (SBP) as a key factor supporting the currency.
Pakistan recorded a current account surplus of $349 million in October 2024, a remarkable turnaround from a deficit of $287 million in the same month last year. This marks the third consecutive month of surplus, driven largely by a substantial increase in remittances. Mohammed Sohail, CEO of Topline Securities, noted that the surplus was driven by a 7% month-on-month (MoM) and 24% year-on-year (YoY) rise in remittances, a significant boost to the country’s foreign exchange reserves.
The rise in remittances has been particularly crucial for the rupee’s resilience. The SBP reported a 35% year-on-year increase in remittances during the first four months of FY25 (July-October), amounting to $11.85 billion compared to $8.79 billion in the same period last year. This surge underscores the pivotal role of remittances in stabilizing Pakistan’s foreign exchange reserves and helping mitigate the pressures on the currency. Analysts believe this strong inflow of foreign currency provides essential support to the rupee, reflecting growing confidence among overseas Pakistanis in contributing to the nation’s economy.
In addition to remittances, steady export performance has also played a critical role in supporting the rupee. Analysts highlighted the importance of strong export receipts in maintaining currency stability, complementing the inflow of foreign funds from remittances. Furthermore, the SBP’s latest report revealed an $84 million increase in official foreign exchange reserves, bringing the total to $11.257 billion. This modest rise from $11.175 billion the previous week indicates steady but cautious progress in stabilizing Pakistan’s external financial position.
Despite these positive trends, analysts caution that global economic volatility continues to pose challenges to sustained reserve accumulation and currency stability.
