Currency devaluation anticipated to manage current account as economic activity rises.
Key Takeaways:
i) Fitch Ratings predicts the Pakistani rupee will depreciate to 285 against the US dollar by June 2025 and 295 by the end of fiscal year 2026.
ii) Pakistan’s current account showed a surplus of $1.2 billion in March 2025, totaling $1.86 billion for the first nine months of fiscal year 2025.
iii) The State Bank of Pakistan (SBP) forecasts foreign exchange reserves to reach $14 billion by the end of June 2025, supported by expected external inflows.
Money Matters Monitoring – Fitch Ratings has projected a gradual depreciation of the Pakistani rupee against the US dollar, forecasting a rate of 285 by June 2025 and 295 by the close of fiscal year 2026. This devaluation is expected to mitigate potential strain on Pakistan’s current account as economic activity in the country increases.
The Pakistani rupee previously reached a record low of 307.10 against the dollar in September 2023. However, it recovered following government measures implemented to counter illegal currency trading. Recent data indicates a positive trend in Pakistan’s current account, with a surplus of $1.2 billion recorded in March 2025. This brings the cumulative surplus to $1.86 billion for the first nine months of fiscal year 2025.
Despite a recent decline in foreign exchange reserves due to debt repayments, the State Bank of Pakistan (SBP) anticipates inflows from external sources. The SBP projects that the reserves will reach $14 billion by the end of June 2025. The International Monetary Fund (IMF) is expected to approve a $1 billion tranche for Pakistan under the Extended Fund Facility. The IMF has also recommended that Pakistan allow market forces to determine the rupee-dollar parity.
