Pakistan exports have slowed down somewhat in the past two weeks ahead a heavy oil import payment and over $1 billion Eurobond repayment after the upcoming Eid-ul-Fitr next week, according to Tresmark – a financial information terminal and treasury management platform.
The platform that serves banks, financial institutions, and importers and exporters in the country added in its weekly commentary and outlook on domestic currency and the economy that Pakistan would smoothly make the two internaitonal payments on time without impacting rupee-dollar parity in the inter-bank market, with Eid related foreign currency inflows including workers’ remittances remain healthy.
Pakistan, running under $7 billion International Monetary Fund (IMF) programme, would continue its strategy of keeping imports within the available resources that are being generated through export proceeds and inflows of workers’ remittances, as “Pakistan is unlikely to burn through reserves to defend the rupee”, according to the report.
The strategy in place would keep rupee-dollar parity range-bound in the inter-bank market in the short-run. The rupee might gradually depreciate against the US dollar in the long-run, as medium-term outlook became much less clear, it said.
Tresmark report read that Ramadan related remittance inflows remain healthy. Foreign exchange (FX) forward premiums are trading above money market levels, “signalling comfortable forex liquidity. News flow from Pakistan-IMF engagements is also broadly constructive”.
Over the last two weeks, however, export related inflows have slowed somewhat.
“At the same time, there appears to be a deliberate effort to stagger import payments so that the inter-bank market remains broadly square on any given day. This approach should continue to deflect undue pressure on rupee parity.”
The report maintained that two notable cash flow pressures lie ahead. A heavy oil payment cycle immediately after Eid and more than $1bn required for upcoming Eurobond repayments due in April 2026.
The development in the offing have “the potential to widen the current account deficit, increase fiscal strain and reduce policy flexibility”.
“As inflation expectations begin to adjust [partially in the wake of increase in petrol and diesel price by Rs55/ litre each last week], interest rates are likely to remain higher for longer. The currency comes under renewed pressure and growth momentum weakens. The cumulative effect can be significantly damaging,“ the report said.
In the base case, Pakistan is unlikely to burn through reserves to defend the rupee.
“The adjustment will instead come through tighter import management and a shift towards a more sustainable external balance. The rupee may depreciate gradually over time, but at this stage we do not expect any abrupt or steep devaluation.
“Therefore, the rupee is likely to remain range-bound over the next few weeks. This [medium term] is where the outlook becomes much less clear,“ it added.
Remittances have quietly kept Pakistan afloat through every crisis. That cushion now looks less certain. If Gulf economies stall, labour demand will naturally soften. Fewer workers abroad mean weaker inflows and rising pressure at home.
“It is a slow-burn risk, not dramatic in headlines, yet powerful enough to reshape Pakistan’s macro trajectory,” Tresmark report said.
Global financial conditions are likely to tighten as geopolitical risk premia are reintroduced into emerging market pricing. Pakistan’s Eurobond yields and credit default swap (CDS) have already widened by around 100bps, signalling a shift in external investor perception, according to the report.
“This raises the cost and uncertainty around market-based financing. Access to Eurobond or Panda bond markets may become more challenging, while foreign direct investment (FDI) and portfolio inflows could remain constrained. The external financing mix therefore becomes more dependent on policy credibility and multilateral engagement,” Tresmark report maintained.
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