Karachi, March 30, 2025 – The Rupee is predicted to trade within a narrow range against the US dollar in the coming sessions, following the extended Eid holidays.
With currency markets reopening on Thursday after the three-day Eid break, traders expect the Rupee to show slight weakness as demand for dollars rises from importers and corporates.
A slowdown in remittance inflows post-Eid could further impact the availability of dollars in the market, exerting additional pressure on the Rupee. The local currency closed at 280.36 per dollar in the interbank market on Monday and weakened slightly to 280.42 on Tuesday. However, it regained some ground by Friday, settling at 280.16 per dollar. The recovery was attributed to Pakistan securing a staff-level agreement with the International Monetary Fund (IMF) for the first review of the ongoing $7 billion loan program, along with a new $1.3 billion arrangement under the Resilience and Sustainability Facility (RSF).
Investor sentiment has strengthened following reports that Pakistan is expected to receive two separate loans under the IMF’s Extended Fund Facility (EFF) and the RSF in the coming months. The IMF’s executive board is likely to approve $2.3 billion in funding for Pakistan, with the government expecting the disbursement by early May, ahead of the fiscal year 2025-26 budget announcement.
The foreign exchange reserves held by the State Bank of Pakistan (SBP) fell by $540 million to $10.61 billion as of March 21, primarily due to external debt repayments. The country’s total liquid foreign reserves also declined by $465 million to $15.551 billion. However, commercial bank reserves saw an increase of $75 million, reaching $4.944 billion.
Despite the drop in reserves, the SBP managed to stabilize its holdings at $11 billion, supported by an improved current account balance, remittances, and strategic dollar purchases from the interbank market. The SBP acquired $5.52 billion between June and December 2024 to bolster reserves and meet external debt obligations.
While the Rupee faces short-term pressures from increased dollar demand and external debt repayments, steady remittance inflows and anticipated IMF disbursements could provide support, helping the Rupee maintain stability in the foreign exchange market.