Karachi, March 21, 2025 – Remittances related to Eid-ul-Fitr provided crucial support to the rupee on Friday, preventing a significant decline against the US dollar in the interbank foreign exchange market.
Amid growing pressure from import payments and corporate dollar demand, these inflows played a vital role in stabilizing the local currency.
The rupee depreciated slightly, losing three paisas to close at PKR 280.26 against the US dollar, compared to the previous day’s closing of PKR 280.23 in the interbank market. Currency experts noted that while the rupee faced downward pressure due to increased dollar demand, the surge in Eid remittances helped contain the fall.
Market analysts explained that the rupee remained under strain as importers and businesses continued to acquire dollars to settle their payments. However, a substantial influx of remittances from overseas Pakistanis ahead of Eid acted as a buffer, preventing a sharper rupee depreciation. This seasonal trend typically strengthens the rupee temporarily, but experts warn that volatility could return once remittance inflows subside.
Despite an increase in Pakistan’s foreign exchange reserves, the rupee still experienced slight depreciation. According to the latest data released by the State Bank of Pakistan (SBP), the country’s total net liquid foreign exchange reserves rose by $187 million over the past week. As of March 14, 2025, the reserves stood at $16.016 billion, up from $15.929 billion recorded a week earlier. This rise reflects continued financial inflows and efforts to bolster external stability.
SBP data further showed that the central bank’s own foreign exchange reserves increased by $49 million, reaching $11.147 billion compared to $11.098 billion in the previous week. However, despite these gains, concerns remain regarding Pakistan’s external position and the rupee’s future trajectory against the dollar.
Looking ahead, experts caution that the rupee may face renewed volatility after Eid, as import bills rise and external debt repayments become due. The country’s current account deficit has already placed additional strain on the rupee, with increased reliance on the dollar for trade and debt obligations. Persistent economic challenges, including fluctuating foreign exchange reserves, could further pressure the rupee in the coming weeks.
If policymakers manage to secure additional foreign inflows or implement measures to curb imports, the rupee could stabilize. Otherwise, sustained demand for the dollar may push the rupee further downward. Market participants and policymakers will need to closely monitor foreign exchange movements to navigate potential risks and ensure stability in Pakistan’s currency market.