KARACHI – July 20, 2025: The Pakistani rupee is expected to continue its slow and steady decline against the dollar in the upcoming week, even as encouraging developments such as a current account surplus and strong foreign exchange reserves offer macroeconomic support.
During the previous week, the rupee saw minor fluctuations. It opened the week at 284.71 against the dollar in the interbank market, dipped further to 284.97 by Thursday, but managed to recover slightly and closed at 284.86 by Friday. Despite this partial recovery, pressure on the rupee remains persistent.
Pakistan’s current account recorded a surplus for the first time in 14 years at the end of fiscal year 2024-25, driven by record-high remittances and a reduction in the services trade deficit. The surplus reached $2.1 billion, or 0.5% of GDP—an impressive turnaround from the $2.1 billion deficit (0.6% of GDP) seen in the previous fiscal year. Moreover, the State Bank of Pakistan’s foreign exchange reserves climbed to $14.526 billion as of July 11, indicating improved external account health.
However, analysts warn that these positive indicators have yet to translate into a stable currency market. They argue that despite the IMF’s continued support and improved sentiment in global markets, the local rupee-dollar exchange environment remains dysfunctional. The spread between buying and selling rates has widened, reflecting limited forex liquidity and multiple unofficial rates being quoted in the open market.
One of the main challenges highlighted is the competition posed by the informal hawala system. Analysts say that unless remittance rates are made more attractive through formal channels, the hawala route will continue to draw inflows, further squeezing the formal forex market and contributing to pressure on the rupee.
Moreover, with the SBP reportedly making regular dollar purchases from the market, liquidity is expected to remain tight. This tightening further reinforces the possibility of a gradual weakening trend in the rupee-dollar exchange rate.
Looking ahead, analysts anticipate a minor weekly depreciation of 10–20 paisa in the rupee against the dollar. While Pakistan’s exports may benefit from upcoming U.S.-Pakistan trade discussions, remittances could face downward pressure in the near term, keeping the rupee on a delicate path.