The Pakistani rupee (PKR) posted a modest decline against the US dollar on Tuesday, depreciating by 15 paisa or 0.05% during the interbank session. The local unit settled at PKR 281.37 per USD, compared to the previous day’s close of 281.22. Despite being a minor change, the movement is reflective of growing currency pressure amid regional economic uncertainties and a shifting interest rate landscape.
The currency experienced a narrow trading band throughout the day, recording an intraday bid high of 281.35 and a low ask of 281.25. In the open market, exchange companies quoted the dollar at PKR 281.50 for buying and PKR 283.15 for selling, indicating a minor premium relative to the interbank rate.
Beyond the dollar, the rupee exhibited weakness against a basket of major global currencies. The most pronounced depreciation was seen against the Chinese yuan, where the PKR declined by 32.23 paisa or 0.83%, closing at PKR 39.00 compared to 38.68 a day earlier. The rupee also lost ground against the euro, falling 80.29 paisa or 0.25% to settle at PKR 319.01, while against the British pound, it depreciated by Rs1.21 or 0.32%, ending the session at PKR 374.76.
Against the Swiss franc, the rupee slipped by Rs1.13 or 0.33%, closing at 341.35. A similar trend was observed against the Japanese yen, with the local unit weakening by 1.47 paisa or 0.75% to 1.9630. Even regional peers like the Saudi Riyal and UAE Dirham saw minor gains against the rupee—up 2.60 and 4.30 paisa respectively—closing at 75.02 and 76.61.
The broader trend of depreciation aligns with the rupee’s performance during the current fiscal year. Since the start of FY25, the PKR has lost Rs3.03 or 1.08% against the US dollar. On a calendar-year basis, it has weakened by Rs2.82 or 1.00%.
Market analysts attribute the rupee’s decline to several intertwined factors. Despite a recent policy rate cut by the State Bank of Pakistan (SBP), aimed at stimulating economic activity, the move has added pressure on the rupee by slightly narrowing interest rate differentials with global currencies. Additionally, subdued remittance flows and cautious investor sentiment ahead of the federal budget announcement have compounded currency volatility.
In the money markets, the Karachi Interbank Bid and Offer Rates (KIBOR) for six-month tenors dropped by 64 basis points, landing at 11.19% and 11.44% respectively. This decline reflects the broader impact of the SBP’s monetary policy easing and hints at the likelihood of softer rates ahead—potentially weakening the rupee further if external inflows remain sluggish.
A glance at 52-week currency performance underscores the rupee’s struggles. The dollar reached a low of PKR 277.51 on October 4, 2024, and has since climbed 1.37%. Against other major currencies like the euro, pound, and franc, the rupee is down between 9% and 11% over the past year, highlighting persistent external account vulnerabilities.
While the rupee’s latest slide is not dramatic, it continues a trend that policymakers are watching closely. Sustained pressure on the currency could prompt further interventions or policy recalibrations by the central bank, especially if upcoming macroeconomic indicators signal further weakness.
The PKR’s trajectory in the weeks ahead will likely hinge on developments in foreign exchange reserves, geopolitical trade dynamics, and investor response to fiscal and monetary reforms set to unfold in the second half of the year.