Karachi, March 5, 2025 – The rupee extended its losses against the dollar on Wednesday, weighed down by heightened demand for import and corporate payments, currency dealers said.
The local currency closed at PKR 279.87 per dollar, depreciating from the previous day’s closing of PKR 278.77 in the interbank market.
Currency analysts noted that the fall in the rupee was primarily driven by increased demand for the dollar, as businesses rushed to settle outstanding payments. Another contributing factor was the latest trade balance data, which revealed a surge in import payments, further intensifying pressure on the rupee. The rising demand for the dollar to fulfill these obligations led to further depreciation of the local currency.
A minor decline in foreign exchange reserves also added to the downward trajectory of the rupee. According to the State Bank of Pakistan (SBP), the country’s total foreign exchange reserves fell by $23 million over the past week. As of February 21, 2025, reserves stood at $15.925 billion, down from $15.948 billion a week earlier. However, the SBP’s official reserves witnessed a modest increase of $20 million, rising to $11.222 billion from $11.202 billion. The central bank remains hopeful that continued negotiations with the International Monetary Fund (IMF) could bring fresh dollar inflows, providing some support to the rupee.
The rupee-dollar exchange rate is also influenced by Pakistan’s current account balance. The country recorded a cumulative current account surplus of $682 million in the first seven months of FY2024-25 (July–January). However, in January 2025, a deficit of $420 million was reported, surpassing the $404 million deficit recorded in January 2024. The widening deficit, largely due to increased imports, has exerted additional pressure on the rupee against the dollar.
Despite these headwinds, some economic indicators indicate potential stability for the rupee. A 32% surge in remittances during the fiscal year’s first seven months has bolstered foreign exchange reserves, helping stabilize the rupee-dollar exchange rate. Additionally, a 10% rise in exports, amounting to $19.55 billion, has helped narrow the trade deficit, offering some relief to the rupee.
If these positive economic trends persist, analysts anticipate that the rupee may maintain a steadier trajectory against the dollar, mitigating the impact of rising import payments and external financial obligations.