The exchange rate forecast for the Pakistani Rupee (PKR) against the US Dollar (USD) suggests a continuing decline in the value of the PKR. Analysts note that recent geopolitical tensions, including border closures and a halt in trade with neighboring countries, have led to a significant depreciation of the PKR by approximately 12% since the start of the year. Predictions indicate a potential decline to 100 PKR/USD by year-end, reflecting the overall instability and challenges facing the currency.
The recent decline in USD value, as reported after a softer Consumer Price Index (CPI) reading from the US, has contributed to the PKR's slight recovery against the dollar, which is currently trading at around 0.003568, just above its three-month average of 0.003551. Traders are increasingly betting on aggressive monetary easing by the Federal Reserve in 2026, fueled by a combination of slowing growth indicators and resurgent labour market strength. However, broader geopolitical risks and domestic instability remain critical factors that could undermine any recovery of the PKR.
Furthermore, the State Bank of Pakistan's interventions to bolster the rupee, along with recent crackdowns on currency smuggling, are highlighted as measures impacting the currency’s performance. Despite these efforts, persistent trade deficits and high inflation, which were partially alleviated by record remittance inflows, contribute to the overall weakened state of the PKR.
While a semblance of stability has emerged from improved political environments and efforts to stabilize the currency through IMF-backed reforms, the sentiment around both the PKR and USD remains cautious. Market expectations of Fed rate cuts and ongoing geopolitical tensions will likely keep the PKR under pressure. Investors are advised to watch for the forthcoming consumer sentiment indexes and any signs of shifts in monetary policy, as these could significantly alter the current trajectory of the PKR against the USD.
