Karachi, February 3, 2025 – The Pakistani rupee continued its downward trend in the interbank foreign exchange market, depreciating to PKR 279.04 against the US dollar on Monday.
The local currency lost 9 paisa compared to last Friday’s closing rate of PKR 278.95, reflecting heightened demand for foreign currency due to mounting payment obligations.
Market analysts attributed the rupee’s weakness to increased dollar demand for import settlements and corporate transactions. The beginning of the week typically sees a rise in foreign payment requirements, exerting pressure on the exchange rate. Throughout the trading session, the rupee remained under stress as concerns over declining foreign exchange reserves and rising external debt repayments weighed on investor sentiment.
Recent data from the State Bank of Pakistan (SBP) revealed that the country’s foreign exchange reserves fell by $137 million in the week ending January 24, 2025. The decline, primarily driven by external debt repayments and other foreign liabilities, brought total reserves down to $16.052 billion from $16.189 billion recorded a week earlier. The persistent reduction in reserves continues to challenge the rupee’s stability in the interbank market.
Despite short-term currency depreciation, some economic indicators suggest potential stability in the long run. A key positive development has been Pakistan’s improving balance of payments. During the first half of the fiscal year 2024-25 (July-December 2024), the country posted a current account surplus of $1.21 billion. This marks a significant turnaround from the $1.40 billion deficit recorded during the same period last year, underscoring ongoing economic adjustments that may eventually support the rupee’s strength.
Additionally, remittances from overseas Pakistanis continue to play a crucial role in stabilizing the rupee. In the first six months of FY 2024-25, remittance inflows surged by 38%, reaching $17.85 billion compared to $13.44 billion in the previous year. These inflows not only bolster Pakistan’s foreign exchange reserves but also provide a cushion against external financial pressures, potentially mitigating further depreciation of the rupee.
While challenges persist, analysts and policymakers remain optimistic that sustained remittance growth, economic reforms, and disciplined fiscal management will contribute to stabilizing the rupee in the months ahead. Strengthening investor confidence and prudent policy measures will be key to ensuring a more resilient currency market.