The Pakistani rupee is expected to maintain stability against the U.S. dollar in the week beginning November 11, 2024, buoyed by a consistent rise in remittance inflows and foreign exchange reserves. Currency analysts anticipate that these supportive factors will help the rupee avoid significant fluctuations, despite ongoing economic pressures.
Over the past week, the rupee experienced minor shifts, beginning at PKR 277.78 to the dollar on Monday, dipping to PKR 277.95 by Thursday, and finally closing at PKR 277.74 on Friday. “With rising remittances and a boost in foreign exchange reserves, we expect the rupee to maintain its stability in the short term,” remarked a currency dealer.
Remittances have been a crucial factor in supporting Pakistan’s foreign exchange reserves and stabilizing the rupee. In October alone, remittance inflows jumped by 23.9% year-on-year, totaling $3.1 billion. The cumulative inflow of remittances reached $11.8 billion in the first four months of the 2024–2025 fiscal year, marking a 34.7% increase from the same period last year. These inflows have consistently contributed to the country’s foreign exchange reserves, helping cushion the rupee against volatility in the foreign exchange market.
The State Bank of Pakistan (SBP) Governor, Jameel Ahmad, shared on Friday that the country’s foreign exchange reserves are projected to reach $12 billion by the end of November. This development aligns with an upcoming review by the International Monetary Fund (IMF), which will evaluate Pakistan’s progress on its $7 billion loan program. Securing a positive IMF review is critical, as it can unlock additional funding, boost investor confidence, and support Pakistan’s economic stability.
The recent rise in foreign exchange reserves can be attributed to several key factors. A narrowing current account deficit, driven by stronger remittance flows, higher export earnings, and funds received under the IMF’s Extended Fund Facility (EFF), has been instrumental. As of November 1, the SBP’s reserves stood at $11.17 billion, a level sufficient to cover over two months of imports. The central bank’s strategic dollar purchases, amounting to $1.3 billion in June and July, have also contributed to strengthening reserves.
Governor Ahmad pointed out additional positive indicators for the economy, including a rise in exports, improving foreign direct investment (FDI) figures, and continued inflows through the Roshan Digital Account (RDA). In October alone, the RDA attracted $200 million, underscoring the strong engagement of overseas Pakistanis in supporting the local economy. Furthermore, Pakistan has fulfilled all requirements of the Asian Development Bank (ADB), positioning the country to receive a $500 million loan disbursement in the near future.
According to a weekly report by Tresmark, a market intelligence platform, the surge in remittances could help maintain a balanced current account, which might stabilize or even strengthen the rupee in the coming months. The report also indicated that swap rates are likely to rise as banks engage in sell-buy swaps to generate rupee liquidity for investments at more favorable rates.
With a steady inflow of remittances, strengthening foreign exchange reserves, and support from international financial institutions, the outlook for the rupee appears optimistic in the near term. These positive economic indicators suggest that Pakistan’s currency is well-positioned to hold steady, fostering a favorable environment for economic resilience and growth as the country enters the final months of 2024.