The current market bias for the PKR to USD exchange rate is bearish.
Key drivers include:
- The Federal Reserve is expected to cut interest rates multiple times by mid-2026, which typically weakens the USD.
- The Pakistani Rupee has recently strengthened due to improved market confidence and economic stability following successful privatisation efforts, such as the sale of Pakistan International Airlines.
- Fitch Ratings forecasts suggest the PKR may weaken gradually, reflecting potential inflationary pressures as economic activity stabilizes.
In the near term, the PKR is expected to trade within a range of consistent strength against the USD, influenced by recent highs.
An upside risk might emerge if the privatization initiatives lead to significant foreign investment, while a downside risk could arise if inflationary pressures in Pakistan escalate or the global appetite for the USD diminishes.