In a remarkable streak, the Pakistani rupee continued its ascent against the US dollar for the seventh consecutive session in the interbank market, signalling a positive outlook for the exchange rate. The State Bank of Pakistan’s recent report revealing a depreciation of the US dollar by 11 paise, closing at Rs 282.90 from Rs 283.01 the previous day, underscores newfound stability in the foreign exchange landscape. While the modest gains may not trigger seismic shifts, they play a crucial role in preventing the dollar from erratic upward movements, providing a sense of relief to both importers and exporters.
Experts suggest that the meagre gains, though not transformative, serve as a stabilising force, averting wild fluctuations on a day-to-day basis. This predictability is a welcome respite for businesses engaged in international trade, allowing them to plan and strategize without the spectre of unpredictable currency movements. The situation, while cautiously optimistic, is a testament to the effectiveness of the measures taken by financial authorities.
Zafar Paracha, General Secretary of the Exchange Companies Association of Pakistan (ECAP), sees promise in the current state of affairs. He notes that the collaboration between exchange companies and banks, marked by daily transactions ranging from $15 to $20 million, is a key factor in maintaining stability. Paracha’s optimism is further fueled by expectations of improved inflows from sources such as the International Monetary Fund (IMF).
Importers, navigating the challenges of a fluctuating market, find additional support through the injection of $300 million from exchange companies. This supplementary financial support helps the State Bank of Pakistan (SBP) in meeting its current account targets. Despite a 10% decline in remittances during the first five months of FY24, the last two months witnessed a positive turnaround, with remittances reaching $2.5 billion in October and $2.2 billion in November. Bankers suggest that if this trend persists amid exchange rate stability and low imports, the country’s current account could find itself in a comfortably favourable position.
The persistent appreciation of the Pakistani rupee against the US dollar, coupled with the collaborative efforts of financial institutions, paints a picture of stability and resilience. While modest, these gains represent a crucial step towards securing a more predictable and robust foreign exchange environment for the nation, fostering confidence among businesses and investors alike.