The recent forecasts for the USD to PKR exchange rate paint a picture of a fluctuating currency dynamic influenced by both U.S. and Pakistani economic factors. Analysts note that the U.S. dollar has weakened, fueled by expectations of future Federal Reserve interest rate cuts amid a disappointing labor market, including a notable decline in private employment. This anticipated easing of monetary policy suggests further downward pressure on the dollar, setting the stage for potential volatility against the PKR.
The imminent release of key inflation data and ongoing trade tensions with China could further sway the USD. Market sentiment is also affected by the Fed's leadership transition, as new frameworks of monetary governance may reshape investor confidence. Additionally, broader global movements toward dedollarization may challenge the dollar's dominance, thus impacting exchange rates moving forward.
Conversely, the Pakistani rupee has shown strain amid geopolitical tensions, leading to a significant 12% depreciation against the USD since January 2025. Some analysts project this trend to persist, with the PKR potentially reaching 100 PKR/USD by year-end, driven by reduced remittances, investor flight, and trade deficits. Despite these pressures, record remittances of $38.3 billion in fiscal year 2024–25 offer a buffer, bolstering foreign exchange reserves and providing some support for the PKR.
The recent staff-level agreement with the International Monetary Fund (IMF) has improved market sentiment slightly, with interventions by Pakistan's central bank also aimed at stabilizing the currency. However, these actions may create artificial demand, which contradicts the fundamental market conditions.
Current trading for USD to PKR at 281.7 lies just below its three-month average, having moved within a stable 1.3% range from 280.4 to 284.1. Given the interplay of these complex factors, stakeholders should remain vigilant, especially as geopolitical and economic conditions evolve.
