The Pakistani rupee has been on an impressive upward journey, strengthening against the US dollar for 44 days in a row. This means the currency is gaining value day by day, and fewer rupees are now needed to purchase one dollar — a positive indicator for a stabilizing and improving economy.

One key reason behind this steady rise is the State Bank of Pakistan’s active intervention in the foreign exchange market. By purchasing dollars and rebuilding foreign reserves, the central bank has boosted confidence in the rupee.

Another contributing factor is the increased inflow of money from overseas Pakistanis, which has further supported the currency’s strength. As a result, on a fiscal year-to-date (FYTD) basis, the PKR has appreciated by 1.16% against the US dollar.

However, the picture isn’t entirely perfect.

While the rupee is gaining against the dollar, it is losing value against several other major currencies, including the euro, British pound, and UAE dirham. On 26th November, Pakistani rupee closed red against these currencies, although it remained green against the Saudi riyal. Additionally, the rupee weakened by 68 paisas against the Canadian dollar (CAD). The rupee lost Rs. 1.53 against the euro and Rs. 1.81 against the British pound, and such declines can pose a serious risk to the broader economy.

Companies that trade in US dollars are benefiting because a stronger rupee helps reduce their overall costs. However, businesses that deal in euros or British pounds are facing higher expenses, as the rupee has weakened against these currencies.

  The State Bank of Pakistan is carefully managing the country’s foreign currency reserves to support the rupee. Analysts warn that the government must maintain stable policies to avoid big ups and downs in currency values.  International events and global markets also affect the rupee's value.

In short, the Pakistani rupee’s strength against the US dollar is a positive sign for the economy. However, its weakness against other major currencies shows that Pakistan still needs to manage its economic policies carefully.

 Credit: Independent News Pakistan (INP)