Pakistani currency expected to snap seven-year downtrend against US Dollar

KARACHI: The Pakistani rupee (PKR) is poised to break a seven-year-long losing streak against the US Dollar (USD), signaling a notable rebound after being considered one of Asia’s weakest currencies just last year.

According to Mettis Global, by December 6, 2024, the rupee’s interbank rate stood at Rs278.009 against the Dollar, marking a 1.39 per cent gain over the year—a significant recovery in comparison to its past performance.

The currency’s journey has been marked by a 10.5 per cent improvement from its all-time low of 307.01 in September 2023.

Interestingly, for over 260 days, the rupee has not seen a one-rupee decline against the Dollar, maintaining low volatility with minor changes ranging between -0.08 per cent and 0.27 per cent.

This turnaround can be attributed to several factors. The extension of the International Monetary Fund (IMF) loan programme, combined with crackdowns on illicit Dollar outflows, rising exports, reduced imports, growing foreign reserves, and steady remittances from overseas Pakistanis, has contributed to the currency’s stability.

The government also adopted a market-determined exchange rate as part of IMF conditions, which, alongside efforts to combat black market activities, helped close the gap between interbank and open market rates.

Economic stability has further supported the rupee’s performance. Foreign exchange reserves have surged to over $12 billion, and the country’s current account has recorded a surplus for three consecutive months.

Remittances have also increased, averaging $2.87 billion per month—a 32 per cent rise compared to the previous year.

Pakistan’s efforts have also earned recognition from international financial institutions. Both Fitch Ratings and Moody’s upgraded the country’s long-term credit ratings, reflecting improved macroeconomic conditions and a better external position.

On the fiscal side, Pakistan achieved a budget surplus for the first time in over two decades during the first quarter of the fiscal year 2024-25.

Inflation has also eased, with consumer price growth slowing to 4.9 per cent in November, its lowest rate since 2018. Falling international oil prices have reduced Pakistan’s oil import bill, contributing to a more favorable economic outlook.

While the rupee’s future remains uncertain due to ongoing political instability and external factors, such as global commodity prices, the overall trend suggests that Pakistan’s currency is on track to end the year on a positive note, potentially breaking its long-standing losing streak against the US Dollar.

PKR’s closing history

December 2: PKR increased 0.03 per cent or 7.65 paisa against the USD in Monday’s interbank session to end the day at Rs277.97 per USD, compared to the previous closing of Rs278.05.

December 3: PKR increased by 10.48 paisa or 0.04 per cent against the US dollar in Tuesday’s interbank session to settle the trade at Rs277.87 per USD, compared to the previous closing of Rs277.97.

December 4: PKR fell 5.41 paisa or 0.02 per cent against the US dollar in Wednesday’s interbank session to settle the trade at Rs277.92 per USD, compared to the previous closing of Rs277.87.

December 5: The PKR fell by 0.01 per cent or 2.17 paisa against the USD to close the day at Rs277.94 per USD, compared to the last closing of Rs277.92.

December 6: PKR dropped by 0.02 per cent or 6.47 paisa against the USD to settle the day at Rs278.01 per USD, compared to the last closing of Rs277.94.

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