Karachi, May 25, 2025 – The Pakistani rupee is expected to come under renewed pressure against the US dollar in the days leading up to the federal budget for fiscal year 2025-26, set to be announced on June 10, 2025.
Currency experts and analysts suggest that rising import payments, increased pre-budget speculation, and mounting economic uncertainty could weigh heavily on the rupee.
This week, the rupee slipped past the 282 mark against the dollar in the interbank market for the first time in 18 months, before slightly recovering to close at 281.97 on Friday. Analysts from Topline Securities attribute this gradual depreciation to a combination of increasing import demand and possible dollar purchases by the State Bank of Pakistan (SBP) in an effort to shore up foreign exchange reserves.
According to a detailed report by financial platform Tresmark, multiple factors are applying pressure on the rupee. These include higher defence expenditures, seasonal Haj-related outflows, and backlog clearance at the Afghan border. Additionally, the SBP’s move to let some currency swaps expire without renewal has further strained both spot and swap markets, contributing to a dip in the rupee’s value.
Other elements exacerbating the situation include the impact of previous global trade policy shifts—such as tariffs imposed during former U.S. President Donald Trump’s administration—and a slowdown in export inflows due to delays and cancellations. The SBP’s swap book has recorded $400 million in buybacks over the past four months, another indication of growing pressure on the local currency.
Notably, the rupee is continuing to slide despite some positive developments. These include the recent release of a $1 billion tranche under the ongoing $7 billion IMF program, as well as an additional $1.4 billion in approved climate resilience funding. SBP reserves have risen to $11.45 billion as of May 16, a four-month high. Financial instruments like Eurobonds and credit default swaps (CDS) have also shown signs of stabilization.
Nonetheless, even with expected Eidul Adha remittances and a potential current account surplus for FY2025, the rupee remains under pressure, highlighting persistent structural challenges and renewed demand for the dollar ahead of the budget announcement.