Recent analyses indicate that the USD to PKR exchange rate is influenced by a mix of geopolitical, economic, and monetary policy factors. Currently, the USD is being pressured by expectations of interest rate cuts from the Federal Reserve, driven by a weaker ISM manufacturing index and overall soft economic signals from the United States. As traders await remarks from Fed Chair Jerome Powell, any indication of a departure from dovish sentiments could potentially strengthen the USD in the near term.
On the other hand, the PKR has faced significant challenges due to escalating geopolitical tensions, contributing to a 12% decline in its value against the USD since the start of 2025. Analysts project that if these tensions continue, the exchange rate may reach 100 PKR/USD by year's end. Despite this, there is some support for the PKR from record-high remittances and a positive sentiment following a staff-level agreement between Pakistan and the International Monetary Fund. This agreement has led to a slight appreciation of the PKR, indicating that there is still some market confidence in its stabilization.
The State Bank of Pakistan's recent interventions, purchasing $9 billion to artificially boost reserves, have created temporary support for the PKR but may not align with longer-term market fundamentals. The current USD to PKR rate at 281.8 is slightly below the three-month average, which has shown stability within a narrow range.
Overall, while USD may see short-term fluctuations based on Federal Reserve communications, the PKR's trajectory remains precarious, influenced by external pressures and domestic economic management. Market participants should monitor these developments closely, as further deterioration in the geopolitical environment or economic indicators could lead to increased volatility in the USD-PKR exchange rate.
