The USD to PKR exchange rate remains under pressure, currently positioned at approximately 281.5 PKR per USD, just below its three-month average and confined within a stable 1.3% trading range from 280.5 to 284.1 PKR. Recent forecasts indicate that the US dollar's weakness may persist due to increasing expectations of a Federal Reserve interest rate cut in December. Analysts suggest that potential contraction in the US manufacturing sector, as indicated by upcoming ISM PMI data, could further dampen the dollar's recovery prospects.
Factors influencing the PKR also present a mixed outlook. Despite experiencing a significant 12% depreciation against the US dollar since January 2025 due to geopolitical tensions and resultant economic strains, the PKR has seen some support from record remittances that surged to $38.3 billion in fiscal year 2024–25. This increase has positively impacted Pakistan’s foreign exchange reserves and provided some backing for the currency.
Market sentiment has been bolstered by a staff-level agreement between Pakistan and the International Monetary Fund (IMF), which has contributed to a slight appreciation of the PKR. However, interventions by the State Bank of Pakistan, purchasing $9 billion from the interbank market to stabilize the rupee, may create artificial demand that contradicts market fundamentals.
As geopolitical risks continue to influence the exchange rate dynamics, economists and forecasters suggest that without significant reform or a resolution of the prevailing tensions, additional depreciation of the PKR could occur, with projections hinting at a potential decline to 100 PKR per USD by year-end. Therefore, stakeholders should closely monitor these developments, as they may have substantial implications for international transactions and exchange rate strategies.
