Karachi, June 22, 2025 – The Pakistani rupee is likely to remain under pressure against the US dollar in the coming week starting June 23, as escalating geopolitical tensions continue to weigh on investor sentiment and currency flows.
The rupee closed at 283.7 in the interbank market on Friday—its weakest level since December 2023—while importers were being quoted at 284.25–284.5. Open market dollar rates hovered around 285.7, reflecting growing demand and uncertainty.
Banks are currently offering rupee rates of Rs1–2 above the market to attract remittances and bolster dollar inflows, a move aimed at offsetting tight liquidity. Despite the downward trend, analysts maintain a cautious optimism, pointing out that Pakistan’s foreign exchange reserves have nearly doubled from $8.8 billion in June 2023 to over $17 billion now, with expectations to surpass $20 billion by the end of June. This is largely driven by projected inflows of $3.4 billion.
However, the dollar liquidity in the local market is still short by around $300–400 million, according to financial intelligence firm Tresmark. Exporters, anticipating further rupee depreciation due to geopolitical developments, are reportedly delaying repatriation of export proceeds, further squeezing the dollar supply.
The State Bank of Pakistan (SBP) continues to mop up dollars from the market to meet reserve targets agreed with the International Monetary Fund (IMF), thereby exerting mild downward pressure on the rupee. Pakistan’s Real Effective Exchange Rate (REER) stands at 97.8, suggesting the rupee is slightly undervalued compared to peers like India, whose REER is 98.57.
With the fiscal year 2025 budget assuming an average exchange rate of 290, analysts suggest the rupee could stabilize within an informal trading band between 283 and 297. Meanwhile, rating agencies forecast the rupee to weaken further, projecting dollar exchange levels between 298 and 305 by mid-2025.
Despite this, gradual depreciation of the rupee—estimated at Rs1.5 per dollar per month or about 6.2% annually—is considered manageable. Global oil prices, a key factor in the rupee-dollar equation, are expected to remain stable, with Brent crude capping around $83 per barrel. At that level, the additional pressure on Pakistan’s dollar outflows would remain contained, posing an estimated annual inflationary impact of 2%—a figure within manageable limits unless geopolitical shocks escalate.