Karachi, June 29, 2025 – The Pakistani rupee is expected to begin the new fiscal year 2025–26 on a stronger note against the dollar, supported by healthy foreign inflows and a more stable external economic environment.
Market analysts anticipate that the local currency may show signs of recovery and stability in the interbank market, following a volatile but resilient performance in recent days.
During the outgoing week, the rupee experienced fluctuations due to global oil market volatility and geopolitical tensions. On Monday, the rupee weakened to 283.87 against the dollar, driven by concerns over the Middle East conflict. However, the situation improved midweek, with the rupee recovering to close at 283.72 by Friday, aided by a ceasefire between Israel and Iran and declining oil prices.
Financial analysts believe that the inflow of $3.6 billion during the past week will bolster the rupee further, as it provides much-needed support to the foreign exchange reserves. A research note from Tresmark, a financial analytics platform, suggested that the rupee is likely to consolidate in the 284–285 range against the dollar, especially given the 2.5% global weakening of the dollar last week and the real effective exchange rate (REER) holding near 97.8.
Despite the positive outlook, challenges remain. The State Bank of Pakistan (SBP) has continued its aggressive dollar-buying to build up reserves and meet IMF benchmarks, creating temporary pressure in the interbank market. As a result, commercial banks have faced a dollar shortage, limiting their ability to offer competitive rates to exporters. Instead, they have increased bids for remittance inflows, leading to psychological expectations among sellers that rates may rise further.
The SBP’s forex reserves stood at $9.06 billion as of June 20, following repayments of external debts. However, recent inflows include $3.10 billion in commercial loans and over $500 million in multilateral assistance, which are expected to strengthen the rupee position in the coming weeks.
Looking ahead, analysts at AKD Securities project greater rupee stability in fiscal year 2026, citing improvements in the current account, higher remittance flows, rising exports, and firm policy measures. A projected 4% devaluation in the rupee is seen as manageable and necessary for tariff rationalization and inflation alignment.
Overall, the outlook suggests that the rupee is entering the new fiscal year with strong momentum and growing investor confidence.