Pakistani rupee ends 2023 with marginal gain versus US dollar

Pakistani rupee demonstrated a slight appreciation against the US dollar for the 13th consecutive session, marking a gain of 0.02 per cent in the inter-bank market on Friday.

According to the State Bank of Pakistan (SBP), the day concluded with the rupee settling at Rs281.86, reflecting an increase of Rs0.07.

Remarkably, this signifies a closure of 2023 with the rupee undergoing a depreciation of 19.7 per cent, originating from its starting point at Rs226.43 against the US dollar in the inter-bank market at the beginning of the year. 

Notably, on the preceding Thursday, the rupee experienced a marginal upturn, settling at Rs281.93 against the US dollar.

A significant development unfolded as the foreign exchange reserves held by the State Bank of Pakistan observed a substantial weekly upswing, surging by $852 million to reach $7.75 billion as of December 22, according to data released on Thursday. 

The overall liquid foreign reserves for the country tallied at $12.85 billion, with commercial banks holding net foreign reserves amounting to $5.1 billion. The SBP attributed this surge in reserves to official government inflows.

On the global stage, the US dollar appeared poised to conclude 2023 with a loss, reversing a two-year trend of gains. This shift was influenced by market expectations that the US Federal Reserve might initiate rate easing as early as March of the following year. 

The greenback remained generally subdued on the last trading day of the year, hovering near a five-month low against a basket of currencies, falling 0.02 per cent to 101.18, following a recent dip to 100.61. 

This trend underscored the impact of the Federal Reserve’s aggressive rate-hike cycle initiated in early 2022 on the dollar’s trajectory over the past two years.