The range-bound Pakistani rupee has finally succumbed to mounting pressure from rising imports, depreciating by 0.03% in the interbank market on Thursday to hit a 17-month low. The local currency closed at 282.06 against the US dollar, marking its weakest level since December 27, 2023, when it last traded near the 282 mark.
"PKR falls 0.10% DoD against USD, closing at 282.06 (level last seen on 27-Dec-2023)," wrote Arif Habib Limited (AHL).
Compared to Wednesday's close of 281.97, the local currency lost Rs0.09 against the greenback, extending its downward pressure amid rising import demand. The uptick in imports has led to increased dollar demand, putting strain on the rupee's value.
"The uptick in import activity has increased dollar demand, weighing on the rupee," said Sana Tawfik, Head of Research at AHL.
Year-to-date, the rupee has depreciated by 0.39% month-to-date (MTD), 1.25% in the current calendar year (CYTD), and 1.32% in the fiscal year to date (FYTD), according to AHL. This decline underscores the delicate balance between external financial inflows and mounting domestic dollar demand, despite recent International Monetary Fund (IMF) disbursements bolstering the central bank's foreign reserves.
The rupee had reached a record low of Rs307.10/$ in September 2023 before strengthening to 275.44 and stabilising for several months. However, the latest depreciation signals fresh challenges for policymakers in maintaining exchange rate stability amid ongoing external pressures.
Moreover, Pakistan's total liquid foreign exchange reserves rose to $16.65 billion as of May 16, 2025, according to data released by the State Bank of Pakistan (SBP).
The reserves held by the SBP stood at $11.45 billion, while net reserves held by commercial banks amounted to $5.20 billion.
The increase in SBP reservesby $1.043 billion during the weekwas mainly attributed to the receipt of the second tranche of the Extended Fund Facility (EFF) from the IMF. On May 13, 2025, Pakistan received SDR760 million, equivalent to $1.023 billion, from the IMF, reinforcing the country's external position.
This marks the highest level of SBP reserves since late December 2024, according to Ismail Iqbal Securities. Compared to the beginning of the fiscal year (FYTD), SBP reserves have grown by $2.06 billion, while year-to-date (CYTD) they show a net decline of $264 million, reflecting ongoing external account adjustments amid a broader reform programme.
Meanwhile, gold prices in Pakistan dropped on Thursday, in tandem with a decline in the international market where gold fell by over 1% as the US dollar strengthened and investors took profits after a brief rally to a two-week high. In the domestic market, the price of gold per tola decreased by Rs1,900, settling at Rs347,500, according to data from the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA). Likewise, the price of 10 grams of gold dropped by Rs1,629 to Rs297,925. This decline followed a sharp increase a day earlier when gold prices had surged by Rs6,600 per tola, reaching Rs349,400 on Wednesday.
Globally, gold fell more than 1% on Thursday as the US dollar strengthened and investors booked profits after prices touched a two-week high earlier in the session, according to Reuters.
Spot gold fell 0.4% to $3,301.37 an ounce, by 14:43 GMT. Prices hit their highest level since May 9 earlier in the session and recorded gains in the previous three sessions.
US gold futures also fell 0.4% to $3,301.00. The dollar index rose 0.3%, making bullion more expensive for foreign currency holders.
Adnan Agar, Director at Interactive Commodities, stated on Thursday that gold prices have started to decline after facing strong resistance in recent trading sessions. "The market hit a high of $3,345 before retreating to a low of $3,280. Currently, it's hovering around 3,294," he said.
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