Karachi, March 12, 2025 – The Pakistani rupee witnessed a marginal decline against the dollar in the interbank market on Wednesday, as heightened dollar demand for import and corporate payments put pressure on the local currency.
The rupee depreciated by two paisas, closing at PKR 279.97 per dollar compared to the previous day’s exchange rate of PKR 279.95. This slight dip in the rupee’s value was primarily driven by increased dollar demand, particularly for settling foreign obligations.
Currency analysts remain cautiously optimistic about the rupee’s stability in the near future, citing positive inflows from remittances and export receipts. According to the State Bank of Pakistan (SBP), workers’ remittances surged by 32.5% during the first eight months (July–February) of the fiscal year 2024-25, reaching a total of $24 billion. This marks a significant increase from the $18.1 billion recorded during the same period in the previous fiscal year. February 2025 alone saw an inflow of $3.1 billion, reflecting a remarkable 38.6% year-on-year (YoY) increase compared to February 2024. Additionally, remittances posted a 3.8% month-on-month (MoM) rise from January 2025, offering some support to the rupee amid volatile market conditions.
Despite these positive indicators, currency experts warned that the rupee remains susceptible to fluctuations due to ongoing external account pressures and declining foreign exchange reserves. As market activity resumed after the weekend, the rupee faced early losses due to heightened dollar demand from importers and corporate entities, a common trend at the beginning of the week. Such demand exerts downward pressure on the rupee, affecting its ability to sustain stability against the dollar.
Official data revealed that Pakistan’s total foreign exchange reserves dropped by $52 million over the past week, reflecting the country’s persistent external account challenges. As of February 28, 2025, total reserves stood at $15.874 billion, down from $15.926 billion a week earlier. While SBP-held reserves saw a slight increase of $27 million to reach $11.25 billion, commercial banks’ reserves declined by $79 million, falling to $4.624 billion. This depletion in reserves has raised concerns regarding the rupee’s trajectory in the coming weeks.
The rupee’s movement continues to be closely tied to Pakistan’s broader economic outlook. During the first seven months of FY25 (July–January), the country maintained a cumulative current account surplus of $682 million. However, January 2025 posted a deficit of $420 million, compared to $404 million in January 2024. The growing deficit, coupled with rising import costs, remains a challenge for the rupee. As economic conditions evolve, investors and market participants will be closely watching the rupee-dollar exchange rate amid ongoing fiscal and monetary developments.