Recent developments in the USD to PKR exchange rate suggest a complex financial landscape influenced by both domestic and international factors. The US dollar has shown volatility after mixed job data from the US. In September, payrolls reached a five-month high, yet the unemployment rate unexpectedly increased, raising speculation about potential Federal Reserve rate cuts. Analysts indicate that while a December rate cut seems unlikely, the approaching US S&P PMIs could pose further pressure on the USD if they indicate slowing private-sector activity.
Meanwhile, significant market factors affecting the PKR include escalating geopolitical tensions leading to a 12% depreciation of the currency against the USD since January 2025. Forecasts estimate that the PKR could decline further, potentially reaching 100 PKR/USD by year-end, attributed largely to reduced remittances and increasing trade deficits. However, there are also positive dynamics at play; fiscal year 2024-25 saw a record surge in remittances, amounting to $38.3 billion, boosting Pakistan's foreign exchange reserves and offering some support to the PKR.
Additionally, a staff-level agreement with the International Monetary Fund (IMF) has enhanced market sentiment, providing a slight upward movement for the PKR. The State Bank of Pakistan's interventions, including purchasing $9 billion from the interbank market to stabilize the currency, indicate efforts to create artificial demand for the rupee, despite contradicting market fundamentals.
Currently, USD to PKR is trading at near 90-day lows of 280.6, slightly below its three-month average of 282.5, maintaining a stable trading range of approximately 1.2%. Analysts suggest that ongoing geopolitical developments and domestic economic measures will continue to shape the exchange rate moving forward. As market conditions evolve, individuals and businesses engaging in international transactions should remain vigilant to these shifts to optimize their currency exchange strategies.
