Karachi, February 20, 2025 – The Pakistani rupee witnessed a slight improvement against the US dollar in the interbank foreign exchange market on Thursday.
After facing persistent pressure in recent sessions, the rupee strengthened marginally, closing at PKR 279.46 per dollar, compared to the previous day’s exchange rate of PKR 279.47 per dollar.
Market analysts attributed this modest gain in the rupee’s value to increased inflows of export earnings and worker remittances. However, the rupee remains under pressure against the dollar due to sustained demand for the greenback, primarily driven by higher import payments and corporate transactions. Currency experts noted that importers’ need for dollars has consistently exerted strain on the rupee, limiting any significant appreciation.
One of the critical factors affecting the rupee-dollar exchange rate is Pakistan’s current account balance. While the country recorded an overall current account surplus of $682 million during the first seven months of the 2024-25 fiscal year (July–January), January 2025 saw a deficit of $420 million, marking the first monthly shortfall since July 2024. This deficit represents a 4% rise compared to January 2024, when it stood at $404 million. The State Bank of Pakistan (SBP) has attributed this increase in the current account deficit to heightened import payments, which have led to additional pressure on the rupee against the dollar.
Another major challenge for the rupee is the recent decline in Pakistan’s foreign exchange reserves. As per the latest SBP data, reserves fell by $252 million, standing at $11.166 billion as of February 7, 2025, down from $11.418 billion the previous week. This depletion, largely due to external debt repayments and financial obligations, raises concerns over the rupee’s stability against the dollar in the near term.
Despite these headwinds, economic experts remain cautiously optimistic about the rupee’s medium-term trajectory. The steady growth in remittances, up by 32% during the first seven months of FY2024-25, has played a vital role in supporting foreign exchange reserves and stabilizing the rupee against the dollar. Additionally, Pakistan’s exports have risen by 10%, reaching $19.55 billion, helping to narrow the trade deficit and provide further resilience to the rupee.
While the rupee continues to navigate economic challenges, consistent export growth and robust remittance inflows are expected to mitigate excessive depreciation against the dollar, offering some hope for exchange rate stability in the coming months.