The USD to PKR exchange rate has recently experienced notable influences from both US economic performance and developments within Pakistan's economic landscape, resulting in a mixed outlook.
The US dollar has softened significantly, driven by a surprising decline in inflation from 3% to 2.7% in November, which has shifted market expectations towards aggressive rate cuts by the Federal Reserve in 2026. Analysts note that the Fed's pivot towards easing monetary policy is leading to increased selling pressure on the USD. Currently, the USD is trading at approximately 280.1 PKR, just 0.6% below its 3-month average of 281.7 PKR, indicating a stable trend within a narrow range.
Simultaneously, the Pakistani rupee has faced challenges, experiencing a 12% depreciation against the dollar since the start of 2025 due to escalating geopolitical tensions and trade disruptions. Forecasters predict a possible decline to around 100 PKR/USD if current conditions persist. However, the State Bank of Pakistan's interventions, including purchasing $9 billion to bolster reserves, have created artificial support for the rupee.
Furthermore, ongoing economic reforms supported by the IMF, along with a crackdown on currency smuggling, have contributed to some stabilization of the PKR. Despite this, elevated inflation and persistent trade deficits pose ongoing risks. Experts note that while the rupee may find some short-term support from government measures and improving foreign reserves—which stood at $19.8 billion as of September—the currency's long-term outlook remains contingent on political stability and macroeconomic management.
Looking ahead, analysts emphasize the need to monitor future US economic data, especially inflation and labor market indicators, as these will play a crucial role in determining the trajectory of both currencies. The interplay between the Fed's monetary policy and Pakistan's economic reforms will continue to be critical in shaping the USD/PKR exchange rate in the coming months.
