Karachi, March 6, 2025 – The Pakistani rupee posted modest gains against the US dollar on Thursday, benefiting from a decline in global oil prices.
The rupee appreciated by 5 paisas, closing at PKR 279.82 to the dollar compared to the previous day’s closing of PKR 279.87 in the interbank market.
Currency analysts attributed the rupee’s slight improvement to falling international oil prices, which eased pressure on Pakistan’s import bill. As a net importer of petroleum products and crude oil, Pakistan spends a significant amount of foreign exchange annually. The reduction in global oil prices has lessened the demand for dollars in the local market, allowing the rupee to strengthen slightly.
Despite this marginal gain, the rupee remained under pressure throughout the trading session due to several economic factors. A minor decline in foreign exchange reserves also weighed on the rupee’s stability. According to the State Bank of Pakistan (SBP), total foreign exchange reserves dropped by $23 million over the past week, standing at $15.925 billion as of February 21, 2025, compared to $15.948 billion a week earlier. However, the SBP’s own reserves showed a modest increase of $20 million, reaching $11.222 billion from $11.202 billion. The central bank remains optimistic that ongoing negotiations with the International Monetary Fund (IMF) may lead to fresh dollar inflows, providing further support to the rupee.
The rupee-dollar exchange rate is also shaped by Pakistan’s current account balance. The country recorded a cumulative current account surplus of $682 million in the first seven months of FY2024-25 (July–January). However, a deficit of $420 million in January 2025, surpassing the $404 million deficit in January 2024, has put additional strain on the rupee against the dollar. The widening deficit, primarily driven by increased imports, continues to exert downward pressure on the local currency.
Despite these challenges, certain economic indicators suggest potential stabilization for the rupee. A 32% surge in remittances during the first seven months of the fiscal year has contributed to foreign exchange reserves, helping stabilize the rupee-dollar exchange rate. Additionally, a 10% rise in exports, reaching $19.55 billion, has narrowed the trade deficit, offering some relief to the rupee. Market analysts expect the rupee’s performance to remain closely tied to global oil price movements and external financial inflows in the coming weeks.