Karachi, May 9, 2025 – The Pakistani rupee continued its downward trajectory against the US dollar on Friday, driven by escalating geopolitical tensions between Pakistan and India, as well as weak inflows from remittances and exports.
The rupee depreciated by 19 paisas, closing at PKR 281.71 against the dollar in the interbank market, compared to the previous day’s rate of PKR 281.52. Despite recent improvements in the country’s foreign exchange reserves, the rupee remained under sustained pressure.
Currency market analysts attributed the rupee’s weakness to heightened uncertainty stemming from regional instability. They noted that although the State Bank of Pakistan (SBP) reported an increase of $231 million in forex reserves—bringing the total to $15.483 billion as of May 2, 2025—the rupee showed no signs of recovery. The reserves had stood at $15.252 billion a week earlier.
The decline in worker remittances also dampened sentiment in the currency market. According to the SBP, remittances dropped significantly by 21% month-on-month, falling to $3.18 billion in April 2025 from $4.05 billion in March. This steep fall contributed to reduced foreign exchange liquidity, thus pushing up dollar demand and exerting downward pressure on the rupee.
Moreover, importers’ renewed dollar buying amid a widening trade deficit further worsened the situation. According to the Pakistan Bureau of Statistics (PBS), the trade deficit in April 2025 surged by 55% year-on-year, reaching $3.39 billion—the largest monthly shortfall in three years. This ballooning gap has significantly increased dollar demand in the market, further weakening the rupee.
Despite a slowdown in import payments and relatively muted corporate dollar settlements, the overall shortage of foreign exchange in the market has persisted. Analysts warn that unless remittance flows rebound and the trade deficit narrows, the rupee is likely to remain under pressure in the coming weeks.
Going forward, currency experts suggest that the government and the central bank may need to take coordinated steps to stabilize the rupee by promoting export growth, managing imports, and encouraging dollar inflows through official channels.