Karachi, July 13, 2025 – Despite a notable increase in Pakistan’s foreign exchange reserves, rupee uncertainty is expected to continue in the coming week starting July 14, according to currency market analysts.
The rupee showed mixed movement over the past week, beginning at 284.22 against the US dollar on Monday and dipping to 284.56 by Thursday. Although it made a modest recovery to 284.46 on Friday, the weekly trend reflected a 25 paisa drop. So far in July, the rupee has weakened by 75 paisa.
Analysts say the ongoing uncertainty is being driven by a combination of market fragmentation, speculative buying, and inconsistent exchange rate policies. Importers are particularly feeling the pressure, often bidding Rs1 to Rs2 above the going rate due to limited dollar availability. Meanwhile, exporters and remittance recipients face dual exchange rates that complicate currency flows.
The presence of wide bid-offer spreads and inconsistent incentives for remittances has created a distorted environment. These issues have shaken confidence in the interbank market and left many participants unsure of where the rupee is heading.
Although the State Bank of Pakistan (SBP) recently acknowledged these problems and emphasized the need for rationalisation, dual rates remain in place, contributing to the prevailing uncertainty.
On a positive note, analysts are hopeful that with Pakistan meeting its reserves target set by the International Monetary Fund (IMF), some market stability could return. The country’s total foreign exchange reserves rose to $20.03 billion as of July 4, with the SBP’s share at $14.5 billion—above both the IMF target of $13.9 billion and the central bank’s own projections.
Improved reserves could help ease pressure on the rupee by restoring investor confidence and encouraging exporters to bring in their foreign earnings. Rising forward premiums may also prompt exporters to resume forward-selling, helping to ease dollar liquidity in the market.
Still, until these positive signals translate into concrete actions and policies, the rupee’s uncertainty is likely to remain. For now, traders and importers will continue to navigate a volatile currency landscape, despite Pakistan’s improved macroeconomic indicators.