June 10, 2025 – Karachi: The Pakistani rupee (PKR) continued its downward slide on Monday, slipping by 21 paisa to close at 283.17 per US dollar, its lowest level in 18 months, as the country grapples with increased import payments, evolving regional tensions, and mounting external debt obligations.
This is the first time since December 2023 that the rupee has breached the 283-level, reflecting renewed pressure on the foreign exchange market amid a rise in geopolitical risks and declining foreign inflows.
Rupee Under Persistent Pressure
According to data from the State Bank of Pakistan (SBP), the rupee has:
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Lost 0.07% in a single session on Monday.
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Shed 0.28%, or 79 paisa, over the past week.
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Depreciated 1.63% in CY2025 and 1.71% in FY2024–25, based on analysis from Ismail Iqbal Securities.
The weakness in the local currency is largely attributed to:
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A surge in import demand as Pakistan prepares for higher summer consumption and power-related needs.
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Scheduled debt repayments to international creditors.
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Lower remittances amid political uncertainty and conflict-related concerns in the region.
“The rupee has been under stress, but compared to previous crises, the market remains more stable,” said Zafar Paracha, General Secretary of the Exchange Companies Association of Pakistan (ECAP).
He added that despite ongoing India-Pakistan tensions and regional conflict, the forex market has been better managed, preventing abrupt spikes in the dollar’s value.
Geopolitical Jitters and Investor Flight
The rupee’s decline is also being compounded by investor uncertainty in light of the Israel-Iran conflict, volatile oil prices, and the upcoming U.S. Federal Reserve meeting. These factors are influencing capital flow decisions globally, and Pakistan is no exception.
Paracha noted that:
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Capital outflows have increased.
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Some investors are diverting funds into cryptocurrencies and offshore investments.
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Remittance inflows, particularly from the Middle East, have slowed amid rising regional instability.
Gold Loses Shine as Investors Book Profits
In a parallel development, gold prices in Pakistan fell on Monday, following a global correction in bullion markets where prices dropped more than 1% as investors locked in gains after an eight-week high.
According to the All Pakistan Sarafa Gems and Jewellers Association:
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The price of gold per tola dropped by Rs700, settling at Rs362,300.
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The price of 10 grams fell by Rs600, closing at Rs310,613.
This mirrored the trend in international bullion markets, where prices dipped due to:
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Profit-taking by global investors.
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Anticipation around the Federal Reserve’s interest rate direction.
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Easing safe-haven demand as some global tensions slightly stabilized.
Despite the recent pullback, analysts suggest that any escalation in geopolitical conflict or a weaker dollar outlook could push gold prices higher again.
Rupee Outlook: Mixed Signals Ahead
The rupee’s immediate direction will depend on a combination of domestic policy, global economic signals, and geopolitical headlines. While Pakistan’s forex reserves have shown some improvement due to IMF disbursements and World Bank support, structural challenges remain:
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Sustained trade imbalance, with rising imports not offset by exports or remittances.
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Debt servicing pressure in the second half of the year.
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Political and geopolitical risk premiums, which weigh on investor confidence and capital inflows.
“Given ongoing repayments and soft remittance inflows, the rupee is likely to remain range-bound with a depreciation bias unless major inflows materialize,” said a currency trader at a leading local bank.
Policy Signals: SBP and IMF in Focus
The SBP’s decision to maintain the policy rate at 11% earlier this week indicates a preference for macroeconomic stability over aggressive stimulus. However, the exchange rate management will remain a key part of its monetary toolkit, especially as inflation expectations and global oil prices continue to fluctuate.
The upcoming budget for FY2025–26 and IMF negotiations are critical to shaping market sentiment. Clarity on fiscal discipline, taxation, and privatization will be closely watched by currency traders and investors.
Conclusion: A Fragile Equilibrium
The Pakistani rupee’s slide to an 18-month low underscores the fragile balance between external obligations and limited forex inflows. While market mechanisms are functioning better than during past currency crises, the environment remains highly sensitive to global and regional developments.
With import demand unlikely to slow and remittances facing pressure, policymakers must tread carefully to maintain exchange rate stability without stifling economic recovery.
