Recently, the euro (EUR) has shown signs of weakness amid improving risk appetite and ongoing uncertainties in the Eurozone economy. Analysts expect that lackluster growth data, particularly the anticipated GDP figures indicating stagnation, could further soften the euro. In light of a risk-on market sentiment, the euro has struggled to maintain its strength, highlighting its vulnerability as a safe-haven currency.
The European Central Bank's (ECB) pending interest rate decision adds to the volatility around the euro. Should the ECB adopt a dovish stance in response to economic indicators like a declining Composite Purchasing Managers' Index (PMI), it could drive the euro lower against other currencies, including the Pakistani rupee (PKR). Macro-economic factors like the ongoing geopolitical instability, especially related to the war in Ukraine, continue to weigh heavily on the Eurozone, affecting investor confidence.
Meanwhile, the Pakistani rupee is facing its own set of challenges, particularly from geopolitical tensions that have resulted in significant depreciation against the US dollar, thus indirectly impacting the EUR/PKR exchange rate. With recent reports indicating a 12% decline in the PKR since January 2025, analysts expect further depreciation, potentially reaching 100 PKR per USD by early 2026. However, interventions by the State Bank of Pakistan, backed by an IMF loan and initiatives to curb illegal currency markets, aim to stabilize the PKR despite short-term inflation pressures.
Current price data suggests that the EUR to PKR exchange rate is at 327.6, marginally below its three-month average of 330.1, indicating a relatively stable range over the past few months. The euro's performance may still be influenced by fluctuations in oil prices; with current oil trading at 64.92 USD, about 2.2% below its three-month average, this could indirectly affect the euro’s strength as rising oil prices tend to boost inflation in Europe.
In summary, while the euro could face additional pressures from economic stagnation and ECB policies, developments within Pakistan, including central bank interventions and geopolitical tensions, are poised to impact the PKR significantly. Traders and businesses involved in EUR/PKR transactions should remain vigilant and consider these factors when planning international transactions.
