The recent forecasts for the EUR to PKR exchange rate reflect a complex interplay of economic indicators, geopolitical tensions, and market sentiment. Currently, the euro is trading at 326.7 PKR, which represents a slight decline of 0.7% from its three-month average of 328.9 PKR. Analysts note that the euro has maintained stability within a 3.8% range, fluctuating between 323.3 to 335.7 PKR, indicative of relatively low volatility in the context of broader market conditions.
Recent developments affecting the euro include a shift in the European Central Bank's (ECB) monetary policy towards a dovish stance, with expectations of interest rate cuts by late 2025. This change could reduce the euro's strength as it lowers the interest rate differential with the U.S. dollar. Conversely, improvements in German consumer confidence and favorable economic sentiment in the Eurozone are likely to lend support to the euro. Additionally, geopolitical uncertainties, particularly related to the ongoing situation in Ukraine, continue to create a mixed outlook for the euro's performance.
On the other side, the Pakistani rupee (PKR) faces substantial challenges due to rising geopolitical tensions, which have led to a significant depreciation against the dollar since January 2025. Analysts project a further decline, potentially reaching 100 PKR/USD by year-end. Despite a remarkable increase in remittances, which bolstered foreign exchange reserves, the rupee remains vulnerable to trade deficits and economic instability. Recent interventions by the State Bank of Pakistan to stabilize the rupee have provided temporary support but may not be sustainable in light of market fundamentals.
The correlation between oil prices and currency value adds another layer to the current dynamics. With oil trading at $62.38, which is 4.1% below its three-month average, fluctuations in oil prices could further influence both the euro and PKR. If oil prices rise, it may lend support to currencies of oil-importing nations, including the Eurozone, while simultaneously exacerbating issues for a country like Pakistan that faces high energy import costs.
Overall, the outlook for the EUR/PKR exchange rate will depend on the evolving economic landscape, ECB's monetary policy responses, and how geopolitical tensions unfold in the coming months.
