Karachi, February 19, 2025 – The Pakistani rupee extended its losing streak for the third consecutive day against the US dollar, as growing foreign payment obligations weighed on the local currency.
The rupee depreciated by 10 paisas, closing at PKR 279.47 per dollar in the interbank market, compared to the previous day’s PKR 279.37. Currency analysts pointed to heightened demand for dollars from importers and corporations as the primary reason behind the rupee’s continued decline.
Current Account Deficit and Its Impact on the Rupee
One of the key factors influencing the rupee’s movement is Pakistan’s current account balance. While the country recorded an overall surplus of $682 million during the first seven months of the 2024-25 fiscal year (July–January), the current account deficit for January 2025 reached $420 million. This marks the first monthly deficit since July 2024 and reflects a 4% increase compared to January 2024’s deficit of $404 million.
The State Bank of Pakistan (SBP) attributed this deficit to a sharp increase in import payments. Market experts warn that if this trend continues, it could exert further pressure on the rupee in the coming months.
Foreign Exchange Reserves and Rupee Stability
Another contributing factor to the rupee’s weakness is the recent decline in Pakistan’s foreign exchange reserves. The SBP reported a drop of $252 million, bringing reserves down to $11.166 billion as of February 7, 2025, from $11.418 billion the previous week. This decline, attributed to external debt repayments and other financial commitments, has raised concerns about short-term rupee stability.
Despite the recent depreciation, economists remain cautiously optimistic about the rupee’s medium-term outlook. They highlight that steady inflows from remittances and exports continue to provide crucial support to the currency.
Remittances and Exports Offering Support
A major factor bolstering the rupee is the 32% surge in remittances during the first seven months of FY2024-25. These inflows have helped strengthen foreign reserves, offering a cushion against rupee depreciation.
Similarly, Pakistan’s export sector has shown promising growth. According to the Pakistan Bureau of Statistics (PBS), exports rose by 10%, reaching $19.55 billion from $17.78 billion in the same period last year. This expansion has helped narrow the trade deficit and provided some relief to the rupee, countering external pressures.