Karachi, February 18, 2025 – The Pakistani rupee has continued its downward trend against the US dollar, closing at PKR 279.37 in the interbank foreign exchange market on Tuesday. This marks a slight depreciation of 10 paisas from the previous day’s closing of PKR 279.27. Currency experts attribute the rupee’s fall to heightened demand for the US dollar, driven by both import and corporate payments. As Pakistan’s economic activities show signs of improvement, the demand for raw materials has surged, exacerbating pressure on the local currency.
The rising import requirements, particularly for raw materials and essential goods, have contributed significantly to the rupee’s weakening. Additionally, the ongoing concerns about the country’s depleting foreign exchange reserves remain a key factor impacting investor sentiment and weighing on the rupee’s stability. Despite these challenges, however, experts are cautiously optimistic about the rupee’s medium-term outlook, as crucial foreign inflows, such as remittances and export receipts, continue to provide critical support to the local currency.
In its recent report, the State Bank of Pakistan (SBP) highlighted a decrease of $252 million in the country’s foreign exchange reserves. As of February 7, 2025, reserves stood at $11.166 billion, down from $11.418 billion the previous week. The central bank explained that this decline was primarily due to external debt payments and other financial obligations. While such outflows create short-term pressure on the rupee, analysts maintain that Pakistan’s overall economic fundamentals remain strong, which provides confidence in the stability of the rupee.
One of the key factors helping to stabilize the rupee has been the growth in remittance inflows. During the first seven months of the fiscal year 2024-25, remittances rose by 32%, reaching a total of $20.85 billion, up from $15.83 billion during the same period in the previous year. This significant increase has been vital in bolstering Pakistan’s foreign exchange reserves, offering support to the local currency, and easing some of the pressure on the rupee.
Another positive factor for the rupee has been the country’s strong export performance. According to data from the Pakistan Bureau of Statistics (PBS), Pakistan’s exports grew by 10% during the July-January period of the fiscal year 2024-25, reaching a total of $19.55 billion, compared to $17.78 billion during the same period last year. This export growth has contributed to narrowing the trade deficit and helping to ease some of the strain on the rupee.
Looking ahead, analysts believe that the future trajectory of the rupee will largely depend on the continued growth of remittances, sustained export performance, and careful management of Pakistan’s foreign reserves. While the rupee may experience occasional fluctuations due to import-related dollar demand, the positive economic indicators suggest that the currency’s overall outlook remains stable. In particular, if remittance inflows and export growth continue to perform well, they could play a critical role in maintaining the rupee’s stability in the medium term.
While challenges persist, such as rising import costs and the continued depletion of foreign reserves, the resilience shown by the rupee amid external pressures offers hope for a more stable and favorable currency environment moving forward.