The recent trend in the PKR to USD exchange rate indicates challenges for the Pakistani Rupee, which has seen a 12% depreciation against the US dollar since January 2025, with potential forecasts suggesting the exchange rate could reach 100 PKR/USD by early 2026. Analysts emphasize that geopolitical tensions, particularly border closures and halted trade with neighboring countries, are significantly impacting currency stability.
In response to this volatility, the State Bank of Pakistan has intervened in the foreign exchange market, purchasing $9 billion to bolster reserves, but this action, amounting to roughly 1.7% of the country’s GDP, may only provide temporary relief. The recent IMF loan of $3.5 billion aimed at fiscal reforms is also crucial, as it compels the government to implement measures that could strengthen the Rupee over the long term, despite short-term inflation risks.
On the other side of the equation, the US dollar has also faced a recent softening, attributed to a market correction and overreactions to the Federal Reserve’s hawkish stance on interest rates amid growing concerns over a potential government shutdown. In the absence of significant US economic data, analysts forecast that movements in the dollar are likely to continue aligning with broader market trends.
Current trading data shows the PKR to USD exchange rate approaching seven-day lows near 0.003537, consistent with its three-month average. This stability within a 1.2% range from 0.003520 to 0.003564 indicates a relatively calm trading environment, but the underlying pressures on the PKR remain influential.
Overall, the interplay of domestic challenges and international market dynamics suggests a complex outlook for the PKR against the USD. Stakeholders are encouraged to monitor these developments closely as they could have significant ramifications for international transactions and currency exchange costs in the coming months.
