The Pakistani rupee showed a marginal improvement against the US dollar on Friday, gaining 0.07% in the inter-bank market.
The local currency settled at 278.21 against the greenback, a slight increase of Re0.19 from the previous day's closing rate of 278.40.
This development comes amidst challenging economic conditions, including a balance of payments crisis and high inflation.
According to the Finance Division's Fiscal Policy Statement-January 2024, the government's cost of borrowing and mark-up payments increased in the fiscal year 2022-23 due to a rise in the policy rate.
Globally, the US dollar is facing pressure, with the euro gaining 0.9% against the dollar this week. This is largely due to signs of cooling inflation and a softening US economy, which has raised expectations of rate cuts. Oil prices, a key indicator of currency parity, also rose on Friday, with Brent crude oil gaining 0.47% to $83.66 a barrel.
Despite these challenges, the rupee's slight gain against the dollar is a positive sign for the economy. However, experts caution that the road to recovery will be long and challenging, requiring sustained efforts to address underlying structural issues.
In related news, the government's cost of borrowing and mark-up payments increased in the fiscal year 2022-23 due to a rise in the policy rate. This was stated in the Finance Division's Fiscal Policy Statement-January 2024, which highlighted the unprecedented challenges faced by the economy in 2023, including the international commodity super-cycle and balance of payments crisis.
Overall, the rupee's marginal gain against the dollar is a small step towards economic recovery, but much work remains to be done to address the underlying issues facing the economy.
