KARACHI: The Pakistani rupee remained steady due to healthy remittances, improved foreign exchange reserves, and higher interest rates, though its near-term outlook depends on the Middle East conflict, which, if prolonged, may put pressure on the country’s external account.
The rupee continued to trade in narrow ranges this week. On Monday, the local currency closed at 278.82 against the dollar, but after minor gains, it ended at 278.77 on Thursday. The financial markets were closed on Friday for the Labour Day holiday.
The rupee saw marginal consolidation, while the Indian rupee (low of 95.32 per dollar) and other regional peers moved to fresh lows, said Tresmark in a note on Saturday.
“The relative resilience in PKR has been supported by the rate hike, a slowdown in SCRA [special convertible rupee account] outflows, and improved remittances and reserve position,” it said.
“However, the near-term trajectory now hinges on the duration of the ongoing conflict. A prolonged situation starts feeding into exports, remittances, and the oil bill, all of which would shift the FX balance,” it added. “This is why we are cautious at this stage. We are advising against forward selling and have asked traders to wait for more clarity on flows.”
Tresmark noted that forward premiums have already repriced sharply. The one-month and three-month premiums moved from 135 and 275 paisa to 190 and 440 paisa over the past week.
In a report, Topline Securities forecasts the rupee to close in the range of 280-282 in fiscal year 2026, and it anticipates the local currency to weaken further to 294-298 (with an average of 289) in FY27. If the Middle East war continues and current account slippage occurs, the depreciation rate could be above the historic average of 5-6 per cent in the next fiscal year, it added.
The State Bank of Pakistan raised its benchmark interest rate by 100 basis points to 11.5 per cent on Monday.
The central bank expects its foreign exchange reserves to reach $18 billion by the end of June. The SBP’s reserves increased to $15.827 billion as of April 24 due to the receipt of Eurobond proceeds.
The SBP expects, despite the current situation, annual remittances could still reach $41 billion, albeit down $1 billion from earlier expectations of $42 billion. For April 2026, SBP expects remittances to largely remain at previous averages.
Remittances to Pakistan increased 16.5 per cent month-on-month (MoM) to $3.8 billion in March. However, money sent home by Pakistani workers employed abroad fell by 5.5 percent year-on-year. Remittances rose 8.2 per cent to $30.3 billion in the nine months of FY26.
