Karachi, March 4, 2025 – The Pakistani rupee registered a slight decline against the US dollar on Tuesday, shedding 10 paisas at the close of interbank trading.
This depreciation was largely attributed to a surge in foreign payments, which exerted pressure on the local currency.
The rupee settled at PKR 279.77 per dollar compared to its previous closing of PKR 279.67 recorded last Friday, February 28, 2025. Market analysts noted that the depreciation was partly due to the reopening of currency markets following a three-day break, including the weekend and the bank closure for Zakat deductions on March 3, 2025. The accumulation of pending foreign transactions during this period heightened demand for the dollar, consequently weakening the rupee.
Another significant factor influencing the rupee’s performance was the latest trade balance data, which indicated a surge in import payments. The increased demand for the dollar to settle these payments put additional strain on the rupee. Additionally, a minor decline in foreign exchange reserves added to the downward pressure on the local currency.
The State Bank of Pakistan (SBP) reported that the country’s total foreign exchange reserves decreased by $23 million in the past week. As of February 21, 2025, reserves stood at $15.925 billion, down from $15.948 billion recorded on February 14. However, the SBP’s official reserves saw a slight uptick of $20 million, reaching $11.222 billion from $11.202 billion a week earlier. The central bank remains optimistic about strengthening reserves through continued negotiations with the International Monetary Fund (IMF), which could bring fresh dollar inflows and provide some support to the rupee.
A critical aspect impacting the rupee-dollar exchange rate is Pakistan’s current account balance. In the first seven months of FY2024-25 (July–January), the country recorded a cumulative current account surplus of $682 million. However, in January 2025 alone, a deficit of $420 million was reported, surpassing the $404 million deficit recorded in January 2024. The widening deficit, primarily due to increased imports, has continued to pressure the rupee against the dollar.
Despite these challenges, some economic indicators suggest resilience in the rupee’s outlook. A notable 32% surge in remittances during the first seven months of the fiscal year has played a crucial role in supporting foreign exchange reserves, indirectly stabilizing the rupee-dollar exchange rate. Additionally, a 10% rise in exports, amounting to $19.55 billion, has helped narrow the trade deficit, offering relief to the rupee.
If these positive economic trends persist, analysts anticipate that the rupee will maintain a relatively stable trajectory against the dollar in the coming months, mitigating the impact of rising import payments and external financial obligations.