Karachi, March 28, 2025 – The Pakistani rupee extended its upward trend against the US dollar on Friday, despite a sharp decline in the country’s foreign exchange reserves.
The rupee appreciated by six paisas, closing at PKR 280.16 per US dollar compared to the previous day’s rate of PKR 280.22 in the interbank market. This upward movement reflects a mix of market optimism and expectations of foreign inflows despite ongoing external account challenges.
According to currency analysts, the depreciation of foreign exchange reserves has raised concerns among investors. However, the market remains hopeful due to the anticipated inflows from the International Monetary Fund (IMF) under its loan program. The prospect of additional funding has provided stability to the rupee, preventing any sharp depreciation.
Latest data released by the State Bank of Pakistan (SBP) reveals that the country’s total liquid reserves have declined by $465 million in just one week. As of March 21, 2025, total reserves stood at $15.551 billion, down from $16.016 billion recorded on March 14, 2025. The decline in reserves is attributed to external debt servicing and payments for essential imports.
Despite this drop, the rupee managed to hold firm, largely due to the IMF staff-level agreement that was recently approved. Analysts believe that once the agreement is formally ratified by the IMF Executive Board, Pakistan could secure $2 billion in financial assistance, which would help boost foreign reserves and strengthen the rupee.
Additionally, a surge in remittances from overseas Pakistanis ahead of Eid has provided short-term relief to the rupee, increasing the availability of dollars in the market. Seasonal remittance inflows have temporarily bolstered the country’s forex reserves, helping stabilize the exchange rate.
However, financial experts caution that this support may be short-lived. Once the Eid season concludes, remittance inflows are expected to slow down, potentially exerting renewed pressure on the rupee. Market participants will closely monitor developments related to external funding and trade balances to gauge the local currency’s future trajectory.