The recent developments impacting the EUR to PKR exchange rate illustrate a complex interplay of economic and geopolitical factors. Analysts noted a decline in the euro's value, primarily due to fading hopes for peace in Ukraine and softer-than-expected inflation data from Germany. This has led to an adjustment in market expectations regarding the European Central Bank (ECB) policy, which is anticipated to shift towards a more dovish stance in the coming years.
The euro (EUR) has shown some resilience, currently trading at 326.6 PKR, which is only slightly below its three-month average of 328.9 PKR. Since January, EUR to PKR has remained relatively stable, fluctuating within a narrow range of 323.3 to 335.7 PKR. This stability is noteworthy, especially considering the ongoing geopolitical tensions in Europe that continue to influence investor sentiment.
Moreover, in the Eurozone, the ECB has recently paused its interest rate hikes due to slowing economic growth, with projections indicating that rates may be lowered to 3.5% by late 2025. This anticipated decrease could reduce the attractiveness of the euro compared to other currencies, particularly the US dollar, amidst a backdrop of resilient economic recovery hopes but cautious market prospects.
Meanwhile, the Pakistani rupee (PKR) is facing significant challenges, having depreciated approximately 12% against the US dollar since the beginning of 2025. It is projected to weaken further, potentially reaching 100 PKR/USD by year-end, largely due to reduced remittances and ongoing trade deficits. Despite a record influx of remittances in fiscal year 2024–25, which has bolstered reserves and momentarily supported the PKR, geopolitical tensions continue to loom large in undermining currency stability.
In addition, developments such as a recent staff-level agreement with the IMF are viewed positively by the markets, offering some temporary relief and a potential modest appreciation in the PKR. However, interventions by the State Bank of Pakistan to stabilize the currency have created artificial demand, contradicting broader market fundamentals.
The volatility in global oil prices, trading at $63.30 per barrel and 2.5% below its three-month average of $64.94, adds further complexity to this exchange. As oil prices fluctuate, they might have downstream effects on both the euro and the rupee, given the Eurozone's energy dependencies and Pakistan's import requirements for oil.
Ultimately, both currencies are navigating an environment marked by geopolitical uncertainties and economic pressures, making the forecasts for the EUR to PKR exchange rate particularly challenging. Stakeholders should remain attentive to both macroeconomic indicators and geopolitical developments that could sway the value of the euro and the rupee in the near future.
