Pakistan’s central bank is likely to allow a gradual depreciation of the rupee to manage external pressures as economic activity gathers pace, Fitch Ratings said in its latest outlook.
Krisjanis Krustins, Director of Asia-Pacific Sovereign Ratings at Fitch, forecasted the rupee to fall to Rs285 per US dollar by June 2025 and further slide to Rs295 by the end of FY26. The weakening, Fitch notes, is part of a broader policy stance aimed at preserving external stability and foreign exchange reserves in the post-IMF programme environment.
While the rupee had stabilised in 2023 after a turbulent year, it remains one of Asia’s lagging currencies, down 0.7% year-to-date according to Bloomberg data.
Fitch acknowledged that a weaker currency may drive up import costs but said it would help narrow the trade deficit and support reserve buffers. The State Bank of Pakistan has not commented on the currency outlook, but the agency indicated the central bank is likely balancing inflation control with competitiveness concerns.
The economic rebound has been bolstered by a drop in oil prices and improved confidence following the country’s successful avoidance of default last year. Prime Minister Shehbaz Sharif’s government secured several tranches from the IMF, and Fitch recently upgraded Pakistan’s sovereign credit rating in response to sustained reform efforts.
Despite easing inflation, the State Bank kept its benchmark interest rate unchanged in March after nearly a year of steady hikes, citing caution over trade-related uncertainties.
