The fair value of the Pakistani rupee (PKR) stands at 249.2 per US dollar after factoring in the current account balance for the July-April period of FY25, according to Tola Associates’ latest economic outlook, published by BR. The report notes that the rupee has been artificially kept undervalued, with the current market value at 249.9/USD compared to the official rate of 282.2/USD.
The report outlines four possible scenarios for the rupee’s future valuation: (1) the valuation as of June 30, 2024, (2) based on the actual current account deficit (CAD) of $665 million for FY24, (3) following the government’s projected CAD of 0.9% of GDP, and (4) an adjusted CAD projection for the Jul-April FY25 period.
Tola Associates also emphasised that a 10-rupee depreciation of the currency leads to a 2% increase in inflation, and vice versa. As of May 29, 2025, the inter-bank market rate for the rupee stands at 282.2/USD, reflecting a slight decline over the past week.
Despite significant improvements, with inflation dropping to 0.3% in April 2025 from 29.7% in November 2023, the inflation outlook remains fragile. Factors such as potential fiscal adjustments, food inflation, and rising global commodity prices could put pressure on inflation levels.
The Monetary Policy Committee has determined that the current monetary policy stance remains appropriate to stabilise inflation within the target range.
The report also identifies key sectors driving export-led growth, including agriculture, manufacturing, and IT, alongside the need for effective public financial management focused on controlling expenditures and enhancing revenue.
The outlook presents cautious optimism, highlighting the need for continued economic reforms while managing inflation risks and ensuring stable growth.
