Karachi, June 25, 2025 — The Pakistani rupee appreciated slightly against the US dollar on Wednesday, reflecting a shift in market sentiment after positive geopolitical developments and easing regional tensions.
In the interbank foreign exchange market, the rupee gained 5 paisas to settle at PKR 283.72 to the dollar, compared to the previous day’s close of PKR 283.77.
This marginal recovery follows Tuesday’s turnaround when the rupee snapped a 10-session losing streak that had been driven by heightened geopolitical tensions and domestic fiscal uncertainty. Currency dealers linked the rupee-dollar recovery to a ceasefire agreement between Iran and Israel, which sparked optimism across regional markets and lowered investor anxiety.
One of the most significant contributing factors has been a decline in international oil prices, directly linked to reduced geopolitical risk. As Pakistan relies heavily on imported fuel, lower global oil rates translate to a reduced import bill. This scenario has lessened the demand for the dollar in oil-related payments, thereby easing pressure on the rupee.
However, not all challenges have subsided. The recently announced federal budget for FY2025–26 has raised inflationary expectations due to proposed tax hikes and expenditure targets. Market participants fear that these fiscal adjustments could lead to increased volatility in the rupee-dollar exchange rate. Investors have responded with caution, fueling speculative activity and raising dollar demand in the short term.
On the positive side, the latest data from the State Bank of Pakistan (SBP) offers some relief. Workers’ remittances surged to $34.9 billion during the first 11 months of FY25, a notable 28.8% increase over the previous year. May alone brought in $3.7 billion, boosting dollar liquidity and helping stabilize the rupee.
Furthermore, the SBP reported a $130 million increase in foreign exchange reserves for the week ending June 13, enhancing its capacity to manage currency fluctuations and protect the rupee-dollar parity.
Analysts warn that while the rupee has found some footing, continued vigilance is required. The currency’s outlook will depend on steady dollar inflows, prudent fiscal policy, and stability in global markets.