The USD to PKR exchange rate has recently come under pressure, with the US dollar weakening against a backdrop of Federal Reserve dovishness and mixed economic signals. Analysts note that the Fed's unexpected rate cut has raised expectations of additional cuts in 2026, which is weighing on the dollar. Recent data showing an increase in US jobless claims, alongside soft manufacturing indicators, has led experts to anticipate a continuation of this downward trajectory for the USD.
Currently, the USD is trading at 7-day highs near 280.8 PKR, sitting just below its three-month average. The trading range has remained stable within 1.4% from 280.2 to 284.1 PKR. While the USD faces downward pressure from a dovish Fed and strengthened risk sentiment globally, factors such as the ongoing strength in the US labor market may mitigate some of the dollar's decline.
In contrast, the Pakistani Rupee (PKR) continues to grapple with significant geopolitical tensions, which have contributed to its 12% depreciation against the USD since January 2025. Uncertainties in the region and the Pakistani government’s efforts, including a crackdown on currency smuggling and an emphasis on IMF-backed reforms, are aimed at stabilizing the PKR. However, analysts predict further depreciation could see the PKR approach 100 PKR/USD by the end of the year.
Moreover, the State Bank of Pakistan's intervention in the currency market by purchasing $9 billion to support the rupee highlights ongoing efforts to create artificial demand amid these struggles. Despite these measures, the overarching influence of geopolitical instability remains a critical concern for the PKR's future trajectory.
In summary, the current market outlook indicates a weakening USD influenced by Federal Reserve policy shifts and mixed economic data, while the PKR contends with external pressures and a challenging domestic landscape. As the situation evolves, stakeholders should remain vigilant to upcoming economic releases and geopolitical developments that could impact currency performance.
