The Pakistani rupee is expected to remain stable in the near term, supported by anticipated inflows from the International Monetary Fund under two separate loan programs and healthy workers’ remittances ahead of Eidul Azha.
The rupee continued to trade within a narrow range in the interbank foreign exchange market during the past week. The local currency closed at Rs278.76 against the dollar on Monday and ended slightly firmer at Rs278.70 on Friday.
Pakistan is set to receive around $1.32 billion after the IMF Executive Board approved loan tranches under the Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF) on Friday.
Currency dealers said the rupee is likely to maintain its range-bound movement as IMF-related inflows are expected shortly, while Eid-related remittances are also projected to increase from the middle of the month.
Market participants believe these inflows will strengthen Pakistan’s foreign exchange reserves and provide additional support to the domestic currency.
According to financial market platform Tresmark, the interbank market remains comfortable in terms of dollar liquidity.
“The central bank’s net swap position also improved by roughly $140 million, suggesting the central bank currently has little need to inject dollar liquidity through buy/sell swaps,” Tresmark said in a client note.
The report added that despite nearly $250 million in oil-related payments, foreign exchange reserves held by the State Bank of Pakistan increased by $23 million to $15.9 billion as of April 30.
Tresmark noted that the rupee appears to have returned to relatively safer territory unless international oil prices witness another sharp increase.
“Exporters have again turned active sellers in the forward market, where premiums remain elevated and increasingly negotiable,” the report stated. “The shift is important, as it suggests the market is once again seeing value in forward selling rather than aggressively holding dollars for protection.”
The report further observed that with the latest IMF approval, the possibility of a fresh Eurobond issuance and plans for a Panda bond, Pakistan’s economic outlook is gradually shifting from default-risk concerns toward rebuilding market access.
Pakistan’s sovereign risk profile has also shown improvement, with the country’s credit default swap narrowing from nearly 577 basis points to around 400 basis points.
Analysts said Pakistan’s macroeconomic focus is increasingly shifting toward the strength of the external account rather than inflation figures alone. Improving reserves, better funding access and the ability to absorb external shocks are now being viewed as key indicators of economic stability.
However, the report warned that higher international oil prices could still pose risks through tighter financial conditions, supply-chain pressures and weaker global economic growth.
Despite these concerns, policymakers appear confident that the country’s improving reserves position, IMF backing and continued inflow stability will help absorb external shocks and support the rupee in the coming months.