KARACHI: The Pakistani rupee is expected to be range-bound in the coming week, with traders closely monitoring if it will further appreciate and break the key level of 280 against the dollar.
The rupee closed at 280.1 per dollar in the interbank market on Monday and ended at 280.02 on Friday.
In a client note on Saturday, Tresmark mentioned that the strong momentum in remittances has reinforced the fact that external stability in Pakistan relies less on exports and more on resilient inflows from overseas Pakistanis.
In December, remittances were robust at $3.6 billion, reflecting a year-on-year (YoY) increase of 16.5 per cent and a month-on-month (MoM) rise of 12.6 percent. Meanwhile, Pakistan’s foreign exchange reserves held by the central bank rose by $141 million, reaching $16.1 billion as of January 2.
The latest liquidity profile from the State Bank of Pakistan (SBP) indicates that aggregate short positions are below $2 billion, which aligns with the IMF’s target. This suggests that the accumulation of reserves is not primarily driven by buy-sell swaps but rather by the mopping up of excess liquidity from the interbank market.
“The current trajectory implies a potential breach of the 280/$ level,” the Tresmark’s report said.
“However, with REER [real effective exchange rate] at 104.8, competitiveness already appears stretched, and keeping this in mind, the central bank should resist the temptation of a decisive break below 280/$, preferring stability over signalling strength, particularly as import demand gradually recovers and longer-dated external pressures remain unresolved,” it added.
“For now, USDPKR is likely to remain range-bound, with two-way movement increasingly coming into play.”
A recent report from AKD Securities Limited stated that the foreign exchange (FX) market has exhibited stability over the past two and a half years, with the Pakistani rupee consistently hovering around 280 per dollar. This stability has been largely attributed to a nationwide crackdown on illegal currency trading, smuggling, and hoarding, which has helped curb activity in the parallel market. Additionally, the SBP has implemented key reforms aimed at improving the functioning of the exchange market.
“Central bank efforts to improve communication and transparency by publishing semiannual targets of FX reserves and FX interventions would help both local and foreign participants to gauge overall FX demand,” the report said. “Moreover, the revision in Foreign Exchange Exposure Limits (FEEL) has enhanced the flexibility of banks to handle FX flows while maintaining prudent risk management.”
A stable FX market has allowed the SBP to conduct sizeable FX purchases, which have helped build reserves. During the period from June 2024 to September 2025, the SBP has made net purchases of $9.7 billion from the currency market, according to the report.
However, REER shows an uptick since May 2025 from 97.8 to 104.8 in November 2025 because of higher inflation readings and appreciation of the rupee against the dollar, it noted.
