The exchange rate forecast for the Pakistani Rupee (PKR) against the US Dollar (USD) reveals a complex interplay of geopolitical tensions and central bank interventions influencing the PKR’s trajectory. Analysts have noted that ongoing border disputes and political instability have resulted in a significant 12% depreciation of the PKR against the USD since the beginning of 2025. Predictions suggest that unless stability is achieved, the exchange rate may further decline to as low as 100 PKR/USD by the end of the year.
The State Bank of Pakistan has actively intervened in the currency market, purchasing substantial amounts of USD to prop up the rupee. This has led to an artificial demand supporting the PKR. Additionally, a recent crackdown on currency smuggling by Pakistan’s intelligence agency has provided some temporary strength to the rupee. However, these measures appear to be short-lived in the face of mounting economic pressures, exacerbated by the need for reforms under an IMF program aimed at fiscal stabilization.
In contrast, the US dollar is also experiencing downward pressure, primarily due to expectations of aggressive interest rate cuts by the Federal Reserve. Recent economic data from the US presents a mixed picture, with a notable rise in jobless claims that may indicate softer growth, yet a resilient labor market continues to temper extreme bearish sentiment. The Federal Reserve's dovish stance has led to a softening of the USD, with forecasts suggesting multiple rate cuts beginning in 2026, which dilutes the dollar's yield advantage.
Recent price data indicates that the PKR to USD exchange rate is at 90-day highs, trading around 0.003569, slightly above its three-month average. This stability, however, exists within a narrow range, reflecting cautious market sentiment amidst uncertain geopolitical factors.
In summary, both the PKR and USD face significant pressures yet from different angles, with geopolitical tensions affecting Pakistan’s currency and dovish U.S. monetary policy impacting the dollar. As these dynamics unfold, stakeholders in international transactions should remain vigilant of these developments to optimize their currency exposures.
