Pakistani Rupee Crosses 280/$ Mark for the First Time Since January 2024 Amid Rising Remittances

KARACHI: The Pakistani rupee has once again breached the critical 280 per US dollar mark in the interbank market, a level last seen in January 2024. The currency closed at 280.07 on Monday, registering a slight decline of 0.04% on a day-on-day (DoD) basis.

The rupee’s gradual depreciation over the past week has resulted in a loss of Rs0.30 (0.11%) in the interbank market. The State Bank of Pakistan (SBP) reported that the currency ended at 279.97/$, compared to 279.67/$ at last week’s closing.

The month-to-date depreciation now stands at 0.14%, while the calendar year-to-date decline has reached 0.54%. Since the beginning of the fiscal year, the rupee has weakened by 0.62%, as per data compiled by Arif Habib Limited (AHL).

Factors Behind the Rupee’s Decline

The rupee has remained relatively stable for much of 2024 following sharp depreciation in late 2023. However, renewed pressure is mounting due to rising import bills, external debt repayments, and foreign currency outflows.

Economic analysts believe that the recent depreciation reflects increased demand for the US dollar, driven by surging imports, profit repatriation by foreign investors, and upcoming external debt repayments by the SBP.

Zafar Paracha, Secretary General of the Exchange Companies Association of Pakistan (ECAP), stated that while currency market pressure has increased due to import demand and profit-taking by foreign investors, the exchange rate remains largely stable.

“December usually sees foreign investors repatriate their profits, as 80% of Pakistan’s banks have foreign shareholders. This, coupled with increased import payments, adds pressure on the rupee,” Paracha said.

He added that there is no immediate cause for concern, as the exchange rate fluctuation remains minimal, with the rupee staying around 280/$.

Record-Breaking Remittance Inflows in February 2025

Despite currency pressures, remittances from overseas Pakistanis provided a significant boost to the economy. According to the SBP, Pakistan recorded $3.1 billion in remittance inflows in February 2025, marking a staggering 38.6% year-on-year (YoY) increase and a 3.8% month-on-month (MoM) rise.

Between July-February FY25, total remittance inflows surged to $24.0 billion, reflecting a 32.5% increase from $18.1 billion in the same period last year.

The largest sources of remittances included:
✅ Saudi Arabia – $744.4 million
✅ United Arab Emirates (UAE) – $652.2 million
✅ United Kingdom (UK) – $501.8 million
✅ United States (US) – $309.4 million

Paracha further predicted a 10% increase in remittances during Ramazan, as overseas Pakistanis traditionally send money home for family support, charity, and zakat contributions.

“Billionaire exporters receive billions in incentives—low-cost loans, rebates, and subsidies—yet their contribution remains stagnant. Meanwhile, overseas workers earning an average of $250 per month have remitted over $35 billion. If provided with proper incentives, this figure could easily double,” Paracha emphasized.

Gold Prices Remain Steady

While the rupee faced depreciation, gold prices remained stable in the domestic market.

Gold per tola in Pakistan held steady at Rs306,000
10-gram gold rate remained unchanged at Rs262,345

On Saturday, gold prices dropped Rs1,000 per tola, settling at Rs306,000. International gold prices also remained stable at $2,910 per ounce, including a $20 premium, as per the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA).

Market Outlook & Future Projections

Experts believe that the rupee’s future trajectory will depend on multiple factors, including:
Pakistan’s trade deficit and import bill
Foreign exchange reserves and external debt repayments
IMF loan disbursements and government economic policies
The impact of remittance inflows during Ramazan

Despite short-term pressures, higher remittance inflows could provide some stability to Pakistan’s foreign exchange reserves in the coming months.