The Pakistani rupee experienced a minor dip against the U.S. dollar as the week opened, closing at PKR 277.86 in the interbank market on Monday, down by 12 paisas from Friday’s close of PKR 277.74. Currency analysts noted that this slight decrease was largely due to increased dollar demand driven by import and corporate payment requirements, which typically pick up at the beginning of each trading week.
According to market observers, Monday often sees heightened demand for dollars as businesses and importers resume financial activities, creating pressure on the rupee. This demand surge places a temporary strain on the local currency, yet financial analysts remain optimistic about the rupee’s medium-term stability. Factors such as a robust influx of remittances and an improved foreign exchange reserve position at the State Bank of Pakistan (SBP) are lending support to the currency’s resilience.
Workers’ remittances have been a key component in stabilizing Pakistan’s economy, with the current fiscal year’s inflows reflecting a notable increase. In the first four months of the 2024–2025 fiscal year (July–October), remittances rose by an impressive 35% year-on-year, reaching $11.85 billion. This figure is up from $8.79 billion recorded during the same period last year, underscoring the critical role that overseas Pakistani workers play in supporting the nation’s economy and its currency. Consistent inflows of remittances have provided a much-needed buffer for the country’s foreign exchange reserves, which, in turn, has contributed to stabilizing the rupee.
Additionally, the SBP reported a slight uptick in foreign exchange reserves last week, with an increase of $19 million, bringing total reserves to $11.175 billion. Though modest, this gain reflects the central bank’s ongoing efforts to maintain stable reserves in the face of challenging economic conditions. These improved reserve levels are a reassuring indicator of the SBP’s capacity to support the rupee during times of high dollar demand.
Analysts suggest that the rupee’s stability could continue if the inflow of remittances remains strong, as these funds from overseas Pakistani workers are a vital support for the country’s balance of payments. The steady remittance flow has been a critical factor in offsetting external demand for foreign currency, helping to alleviate some of the rupee’s downward pressures.
Export receipts are also contributing positively to the currency’s stability, further balancing Pakistan’s foreign exchange requirements. The rise in exports has added a layer of resilience to the rupee, demonstrating the effectiveness of a more diversified foreign currency inflow. With a combination of strong remittance growth, steady export performance, and prudent reserve management, Pakistan’s economy is progressively establishing a stronger foundation for the rupee.
Despite the challenges ahead, these steady inflows have instilled optimism among market experts, who foresee a relatively stable performance for the rupee in the weeks to come. As long as remittances and export earnings maintain their current momentum, the rupee’s outlook appears cautiously positive, providing essential support amid external economic pressures. The continued flow of foreign currency from various sources is expected to be instrumental in helping Pakistan manage its foreign exchange needs, thereby fostering a favorable environment for the rupee’s stability.