The Pakistani rupee is expected to maintain stability for the remainder of the current fiscal year, supported by a robust external position and optimistic projections for foreign currency inflows. Analysts anticipate the currency trading at around 282 per dollar by the end of FY25, according to a recent report by Taurus Securities titled Pakistan Investment Outlook 2025.
The report highlights that the rupee’s stability hinges on the timely materialization of projected external inflows, with no significant risks currently threatening the external sector. Taurus forecasts an average exchange rate of Rs280.6/USD for FY25, with a slight depreciation to Rs300.3/USD by FY26. “The rupee appears fairly valued when considering the Real Effective Exchange Rate (REER) index,” the report noted.
Finance Minister Muhammad Aurangzeb recently informed the Senate Standing Committee that Pakistan’s external financing gap for the fiscal year has already been met. He added that the government plans to re-enter international financial markets after achieving an improved credit rating in Category B. He assured that foreign borrowing would be pursued prudently and only under favorable terms.
Pakistan’s external sector has demonstrated significant improvement under the International Monetary Fund’s (IMF) program. Over the past 18 months, official foreign exchange reserves have increased from $4.44 billion in June 2023 to $12 billion as of December 6, 2024, providing over two months of import cover. The current account deficit has also narrowed sharply, declining from 5% of GDP in FY22 to 0.3% in FY24.
The stability has been further supported by timely debt rollovers, favorable global commodity prices, and reforms in exchange companies that have boosted workers’ remittances. The State Bank of Pakistan (SBP) has also reduced its forward positions from $4.5 billion in June 2023 to $3.1 billion in November 2024.
Moody’s recent upgrade of Pakistan’s credit rating from Caa3 to Caa2, with a “Positive” outlook, underscores improved macroeconomic conditions and government liquidity. Meanwhile, the IMF has urged Pakistan to continue with a market-determined exchange rate, projecting a modest current account deficit of 1% of GDP through FY29.
Despite external debt repayments of $26.1 billion due in FY25, Pakistan has met its financial obligations, including Eurobond payments and foreign profit repatriations. Analysts believe these factors, combined with structural reforms, will help sustain the rupee’s stability and support investor confidence.