In a high-stakes effort to stabilize the domestic currency, the Government of Pakistan has directed commercial banks and foreign exchange companies to take decisive steps to bring down the PKR/USD exchange rate, urging immediate action “at all costs.” This directive reflects growing concern within official circles over exchange rate volatility and its impact on inflation, import costs, and public sentiment.
The instruction comes amid a renewed focus on controlling speculative currency movement and bridging the gap between interbank and open market exchange rates. The government’s position underscores its intent to contain rupee depreciation and avoid the economic ripple effects that accompany a weaker local currency, especially in an import-dependent economy like Pakistan’s.
According to sources close to the matter, the government is intensifying pressure on both licensed exchange companies and scheduled banks to reduce dollar rates offered to customers, particularly in the open market. There has also been a clear message to minimize the differential between interbank and retail rates, which in recent months had widened significantly due to supply-demand imbalances and external pressures.
In parallel, regulatory bodies including the State Bank of Pakistan (SBP) are closely monitoring currency flows and market conduct to detect and deter hoarding or manipulation. Officials believe that unchecked price movements in the currency market contribute not only to inflation but also undermine confidence in the financial system.
Exchange rate management has become a focal point of the government’s broader macroeconomic stabilization agenda, especially following months of relative rupee volatility triggered by global commodity price shocks, foreign debt repayments, and uncertainty around external financing. Despite recent inflows under the International Monetary Fund’s $7 billion Extended Fund Facility and support from friendly countries, the government sees further room to reinforce rupee stability through coordinated action.
Market watchers say that the rupee’s stability is also key for policy credibility, investor sentiment, and inflation management. The government’s firm stance on reducing the dollar rate suggests a more interventionist approach in the near term, possibly through administrative measures and enhanced surveillance of currency transactions.
Exchange companies, meanwhile, are being encouraged to increase their market participation and dollar supply to help ease pressure. There have also been discussions around limiting unauthorized outlets and cracking down on parallel market activities that distort genuine supply-demand dynamics.
Banking sector participants are reportedly coordinating with regulators to develop mechanisms that ensure more transparent and competitive forex pricing. Analysts, however, caution that lasting stability will depend on sustained reforms, including increased foreign inflows, fiscal discipline, and export competitiveness.
The move to aggressively push for a stronger rupee highlights how central currency management has become to Pakistan’s near-term economic strategy. While the government’s push is expected to result in a nominal improvement in exchange rates, structural solutions will still be required to address underlying issues in the external account and overall market confidence.