The USD to PKR exchange rate recently experienced a rise, reaching 14-day highs near 285.0, which is approximately 0.8% above its three-month average of 282.7. The USD's strength has been supported by a rebound in US retail sales and positive consumer sentiment indicators anticipated this week.
Analysts attribute the dollar's recovery to various factors, including remarks from President Donald Trump regarding the Federal Reserve. The US dollar serves as a critical global benchmark, and recent strong economic data has bolstered investor confidence. Higher interest rates set by the Federal Reserve attract foreign investments into USD-denominated assets, further supporting its value. Given the current geopolitical tensions and economic uncertainties, the USD continues to function as a safe haven for investors, enhancing its demand.
On the other hand, the Pakistani Rupee (PKR) faces challenges, particularly from external pressures such as the recently imposed 29% reciprocal tariff on Pakistani goods, part of broader trade tensions. This tariff could impact export revenues and put additional stress on the local currency. Despite significant remittances from Pakistani workers abroad, which have given some support to the PKR, there are concerns that these funds may be short-lived as workers return home due to a challenging job market.
Moreover, escalating military tensions between India and Pakistan, including recent air strikes, may affect investor sentiment and international perceptions of stability within the region, potentially leading to further PKR depreciation.
Overall, looking ahead, the value of the USD is likely to remain influenced by the Federal Reserve's interest rate policies, while the PKR will be affected by geopolitical stability and trade relations. Stakeholders should monitor these developments closely, as they will have significant implications for international transactions involving both currencies.