Pakistani currency strengthens 1.25% year-on-year as remittances and policy support offset external sector challenges.
The Pakistani rupee recorded a 1.25% year-on-year gain against the US dollar in May 2026 despite continued external sector pressures and global economic uncertainty.
The rupee closed at Rs278.50 in the interbank foreign exchange market on May 29, 2026, compared with Rs282.02 on May 30, 2025, according to data released by the State Bank of Pakistan on Friday.
Currency market experts said the local unit managed to maintain relative stability over the past year mainly due to central bank measures and sustained foreign inflows during the period.
They noted that geopolitical uncertainty continued to affect Pakistan’s imports, exports and broader economic outlook. However, strong inflows of workers’ remittances helped support the external account and contributed to the rupee’s stability against the dollar.
Analysts warned that rising demand for imported raw materials in the coming months could create pressure on the domestic currency. They also said that ongoing geopolitical tensions involving the United States and Iran may further increase volatility in foreign exchange markets.
According to the International Monetary Fund country report on Pakistan, maintaining a flexible exchange rate supported by an active foreign exchange market remains critical for absorbing external shocks and rebuilding foreign exchange reserves.
The IMF noted that Pakistan continues to view exchange rate flexibility as a key mechanism to manage spillover risks from regional conflicts while ensuring balance of payments pressures do not disrupt import financing and external payments.
Pakistani authorities have also informed the IMF that improved transparency, including the publication of semi-annual reserve targets and foreign exchange intervention data, has helped market participants better assess foreign exchange demand.
Market observers believe the rupee’s future performance will largely depend on external financing inflows, remittance trends, oil prices and geopolitical developments in the region.
