Fitch Ratings has projected that Pakistan will gradually devalue its currency to avert likely pressure on the current account as economic activities pick up in the country, media learnt on Tuesday.
Bloomberg reported that “the ratings company sees the rupee falling to 285 against the dollar by the end of June and weakening further to 295 by the end of the next fiscal year in 2026,” citing Krisjanis Krustins, Director of Asia Pacific Sovereign Ratings at Fitch.
If the Pakistani rupee depreciates to Rs285 per US dollar, it would represent a 1.5% decline over the next two months from the current interbank rate of Rs280.76. A further slide to Rs295 would amount to a 5% depreciation by June 2026 from the current exchange rate.
“Pakistan’s central bank will allow the rupee to gradually weaken to manage pressures on the current account as the economy gains pace,” the global media outlet added.
Pakistan posts record $1.2bn current account surplus in March 2025
The local currency hit an all-time low of Rs 307.10 against the US dollar in the first week of September 2023, amid a surge in dollar smuggling from Pakistan to neighboring countries.
The government’s crackdown on illegal currency dealers helped the Pakistani rupee recover to around Rs277/USD in the first half of 2024.
The domestic currency has cumulatively depreciated by 0.86%, or Rs 2.43/USD, during the first eight months of the current fiscal year 2024-25. It stood at Rs 280.77/USD on Tuesday, compared to Rs278.34/USD on June 28, 2024, according to SBP data.
Meanwhile, Pakistan’s current account posted a significant surplus of $1.2 billion in March 2025, compared to a revised deficit of $97 million in the previous month, SBP reported last week.
This brings the total current account surplus to $1.86 billion in the first nine months of the current fiscal year (9MFY25), in stark contrast to a deficit of $1.65 billion during the same period of the previous fiscal year.
SBP Governor Jameel Ahmad stated last week that Pakistan’s foreign exchange reserves have dropped by $2 billion over the past couple of months due to foreign debt repayments, bringing the total down to $10.6 billion.
However, he anticipated that Pakistan would receive $4–5 billion from external sources by the end of June, including inflows from global financial institutions.
In light of this, he revised the projection for SBP-held foreign exchange reserves to $14 billion by the end of June 2025, up from an earlier estimate of $13 billion.
Imports rose to $5.7 billion in March, indicating a pickup in economic activity, he added.
The governor also projected that the economy would grow by 3% in FY25, compared to 2.5% in FY24.
The IMF Executive Board is expected to consider approving the second tranche of $1 billion under the Extended Fund Facility (EFF) for Pakistan by the end of April or early May 2025. The expected decision follows a staff-level agreement reached between the IMF and Pakistani authorities under the $7 billion EFF on March 25, 2025.
The global financial institution has repeatedly recommended that Pakistan allow market forces to determine the rupee-dollar parity based on the supply and demand dynamics in the inter-bank market.
American Dollar Exchange Rate