Recent forecasts indicate a challenging outlook for the Pakistani Rupee (PKR) against the US Dollar (USD). Analysts cite significant geopolitical tensions that have already resulted in a 12% depreciation of the PKR against the USD this year. Projections suggest a potential decline to 100 PKR/USD by year-end, fueled by ongoing political unrest in the region.
The State Bank of Pakistan's efforts to bolster the rupee through purchasing $9 billion in foreign currency have met with limited success, leading to artificial demand without sustainable support. Meanwhile, a crackdown on currency smuggling has led to moments of strengthening for the rupee. However, the overall economic environment remains fraught, with challenges stemming from high interest rates and the pressures of fiscal reforms tied to the International Monetary Fund (IMF).
On the USD side, the currency has shown signs of weakness largely due to expectations of significant interest rate cuts from the Federal Reserve in 2026. The market is pricing in these cuts amid mixed US economic data that depict a slowing growth landscape. Although the labour market remains resilient, cooling economic indicators indicate downward pressure on the USD. The recent decline in the US Dollar Index (DXY) suggests an environment where risk assets may thrive, further pushing USD down.
Currently, the PKR is trading near 90-day highs at 0.003567 USD, reflecting a slight increase from its 3-month average of 0.003543 and remaining stable within a narrow 1.3% range. Market experts see this as a reflection of ongoing support measures for the rupee, but caution that heightened geopolitical risks and economic policies could lead to increased volatility. With future movements contingent on forthcoming economic indicators and developments, stakeholders are advised to remain vigilant in monitoring these factors.
