Karachi, March 27, 2025 – The Pakistani rupee continued its upward trajectory against the US dollar on Thursday, appreciating by 4 paisas amid renewed optimism surrounding the country’s economic outlook.
Strengthened by positive signals from the International Monetary Fund (IMF), the rupee closed at PKR 280.22 per dollar in the interbank market, compared to the previous day’s rate of PKR 280.26.
Currency market analysts attributed the rupee’s continued gains to the recent staff-level agreement between Pakistan and the IMF, which, once formally approved by the IMF Executive Board, is expected to unlock around $2 billion in financial assistance. The anticipated dollar inflows are projected to enhance Pakistan’s foreign exchange reserves, alleviating pressure on the rupee and bolstering investor confidence in the local currency.
Earlier this week, the rupee had gained 16 paisas against the dollar, following the IMF’s announcement regarding Pakistan’s ongoing loan program. However, in prior weeks, the rupee faced mounting pressure due to substantial dollar outflows linked to import payments and corporate remittances. The increased demand for the dollar to meet external obligations momentarily weakened the rupee, raising concerns about the sustainability of its recent gains.
The surge in remittances from overseas Pakistanis in the run-up to Eid has provided temporary relief, increasing the availability of dollars in the market. As expatriates send funds home for holiday-related expenses, the rupee has received much-needed support. However, financial experts caution that once the Eid season concludes, the inflow of dollars from remittances may slow down, leaving the rupee vulnerable to potential depreciation.
Despite recent improvements, Pakistan’s foreign exchange reserves remain under pressure. The State Bank of Pakistan (SBP) reported a net increase of $187 million in liquid foreign exchange reserves over the past week. As of March 14, 2025, the total reserves stood at $16.016 billion, up from $15.929 billion a week earlier. The SBP’s own reserves also saw a $49 million increase, reaching $11.147 billion. Nevertheless, persistent dollar outflows for trade and debt servicing continue to pose challenges for the rupee.
Looking ahead, financial analysts anticipate fluctuations in the rupee’s value, particularly after Eid, when external debt payments and rising import bills may intensify pressure on the currency. To maintain stability, policymakers may need to implement strategic measures such as curbing non-essential imports and enhancing foreign investment inflows. Without these measures, the rupee may struggle to hold its recent gains, potentially leading to renewed volatility in the currency market.