The USD to PKR exchange rate has exhibited considerable volatility in recent weeks, currently trading near 90-day lows at 280.3 PKR per USD. Analysts have noted that it remains just 0.7% below the three-month average of 282.2 PKR, having experienced a stable trading range of 280.3 to 284.1 PKR.
Recent forecasts indicate that the USD is facing downward pressure due to heightened expectations regarding aggressive rate cuts by the Federal Reserve in 2026. Analysts have observed a weakening US dollar as traders price in these cuts, particularly with the Federal Reserve looking to adopt a more dovish stance amidst mixed economic signals. While the US labor market remains strong, indicating resilience, other economic indicators suggest a slowdown, thus supporting projections of a weaker dollar moving forward.
On the other side, the Pakistani rupee (PKR) is grappling with significant challenges stemming from geopolitical tensions that have contributed to a 12% depreciation against the USD since January 2025. Forecasts predict a further decline towards 100 PKR/USD by year-end if the current situation persists. Analysts point out that while the State Bank of Pakistan has intervened to support the rupee through substantial dollar purchases, the effectiveness of such measures remains in question given the ongoing economic pressures.
Moreover, the crackdown on currency smuggling and the commitment to IMF-backed reforms have provided some temporary stabilization, yet the overall outlook remains cautious for the PKR. As the Federal Reserve's decisions play out in the coming weeks, market participants will be particularly attentive to upcoming economic reports from the US, which could further influence the dynamics between the USD and PKR.
In summary, while the USD faces a hardening path downward infused with risk-on sentiment and expectations of rate cuts, the PKR also remains vulnerable due to geopolitical and economic instability. This combination underlines the importance of closely monitoring developments that could sway the USD/PKR exchange rate in either direction as 2025 draws to a close.
