Pakistani currency reverses two-week gains versus the US dollar
In the financial world, the US dollar has been gaining strength against the Pakistani rupee, a trend that has been ongoing since March 2025. The exchange rate has risen from around 278-279 PKR per USD in early 2025 to about 284 PKR per USD by August 2025, indicating a depreciation of the Pakistani rupee relative to the US dollar.
This trend reflects a complex interplay of factors including political instability, economic challenges, and external pressures such as import costs and inflationary concerns in Pakistan. The highest USD/PKR rate in 2025 was approximately 293.33 PKR on March 10, 2025, and since then, the exchange rate has somewhat stabilized with some fluctuations but remained elevated around 283-285 PKR per USD.
Meanwhile, oil prices rebounded from a five-week low on Wednesday. US West Texas Intermediate crude settled at $66.28 a barrel, while Brent crude futures settled at $68.75 a barrel.
In the domestic market, the services sector in the US unexpectedly flatlined in July, according to recent reports. On the other hand, in Pakistan, the Pakistani rupee showed some signs of recovery against the US dollar in the open market on Wednesday. The buying rate increased by 12 paise, closing at 284.22, while the selling rate remained unchanged at 285.15.
In the inter-bank market, the buying rate was Rs 282.67 and the selling rate was Rs 282.87. Compared to other currencies, the Pakistani rupee gained against the Saudi Riyal by 1 paisa for buying and remained unchanged for selling, closing at 75.65 and 75.95, respectively. Against the UAE Dirham, the Pakistani rupee gained 3 paise for buying and lost 5 paise for selling, closing at 77.36 and 77.65, respectively.
Internationally, the US dollar was rangebound on Wednesday. Trump has narrowed the possible replacements for Fed Chair Jerome Powell to a short list of four, and traders continue to price in an over 90% chance of a Fed cut in September, with about 58 basis points worth of easing expected by the year-end.
Political tensions also rose as Trump threatened India with higher tariffs over its Russian crude purchases.
In summary, the US dollar continues to strengthen against the Pakistani rupee, while oil prices have rebounded from a five-week low. The services sector in the US unexpectedly flatlined in July, and the Pakistani rupee showed some signs of recovery against the US dollar in the open market on Wednesday. International tensions also remain high, with Trump threatening India over its Russian crude purchases.
A trader might find an opportunity to capitalize on the momentum of the strengthening US dollar against the Pakistani rupee, considering the exchange rate's continuous rise since March 2025. In the inter-bank market, the Pakistani rupee showed some improvement against the US dollar, with the buying rate reducing by approximately 3 paisa, while the selling rate remained unchanged. Meanwhile, political tensions between the US and India continue to escalate, with Trump threatening India over its Russian crude purchases. Investors who are keeping a close eye on the US Federal Reserve's decision might also consider the possibility of a Fed cut in September, as indicated by a high probability of over 90% among traders.
