Pakistan’s Real Effective Exchange Rate slips to 103.73 in December after 1.09% monthly decline

Pakistan’s Real Effective Exchange Rate (REER) declined to 103.73 in December 2025, down from a revised 104.88 in November, according to data released by the State Bank of Pakistan (SBP) on Monday.

The central bank data shows the REER fell by 1.09% month-on-month during December. On a year-on-year basis, the index was marginally higher, rising 0.06% from 103.67 in December 2024.

A REER reading above 100 indicates relatively weaker export competitiveness and cheaper imports, while readings below 100 suggest the opposite. According to the central bank, REER measures the price of a basket of domestic goods relative to similar baskets in major trading partners, adjusted for nominal exchange rates and weighted by trade shares.

Topline Securities said Pakistan’s REER, despite the recent decline, remains above its 10-year average of 103.0. The brokerage noted that a REER level above 100 reflects an overvaluation of the domestic currency relative to peer economies.

Separately, Pakistan’s Nominal Effective Exchange Rate (NEER) index declined by 0.54%  month-on-month to a provisional 37.97 in December 2025, compared with 38.18 in November.

On a year-on-year basis, the NEER fell by 3% from 39.15 recorded in December 2024.