ISLAMABAD: Despite occasional jitters in the currency market, recent data suggests that concerns over Pakistan’s rupee stability may be exaggerated. Economic indicators point toward resilience, not crisis, as the country enters the new fiscal year.
From rising forex reserves to a potential current account surplus, macro fundamentals appear to be aligning in Pakistan’s favor — a trend experts argue should calm nerves in the investor community and among the public.
Forex Reserves and Investor Sentiment Strengthen
Pakistan’s foreign exchange reserves have nearly doubled from $8.8 billion in June 2023 to over $17 billion as of June 2025, according to data from the State Bank of Pakistan. This rise provides critical cushion for external payments and currency defense.
In parallel, Eurobond yields and Credit Default Swap (CDS) spreads have improved, signaling that global investors view Pakistan’s economic outlook more favorably. Bond yields, often a proxy for investor risk perception, have risen by 90 basis points this quarter, reflecting renewed demand for Pakistani debt instruments.
REER and Current Account Trends Favor the Rupee
Another major factor supporting the currency is the Real Effective Exchange Rate (REER), which currently stands at 97.8. Economists say this level suggests the rupee remains undervalued, making exports more competitive globally. For comparison, India’s REER currently stands at 98.57.
Additionally, Pakistan is on track to post a current account surplus for the ongoing fiscal year, which typically eases pressure on the currency by reducing demand for foreign exchange. A surplus also limits the need for external borrowing, strengthening the government’s fiscal position.
With these indicators trending in a positive direction, analysts advise that fears of a currency collapse or forex crisis are not supported by current macroeconomic fundamentals.
