Pakistan’s rupee depreciation continued on Wednesday as the currency lost 29 paisa against the US dollar. The interbank rate fell to Rs284.96 amid a surge in import payments, profit repatriation by multinational firms, and looming external debt repayments. This weakening trend follows a brief gain earlier in the week.
Rupee Falls After Brief Stability
On Tuesday, the rupee had seen a slight uptick, appreciating by five paisa to close at Rs284.67. But this stability was short-lived. The currency reversed direction the following day, falling 0.10% as economic pressures resurfaced.
Ali Najib, Deputy Head of Trading at Arif Habib Limited, said the renewed decline stemmed from strong dollar demand. He pointed to factors such as increased import activity, repatriation of corporate profits, and market caution in light of upcoming debt payments.
SBP Dollar Buying Adds Pressure
Another key factor contributing to rupee depreciation is the State Bank of Pakistan’s ongoing dollar buying campaign. The SBP has reportedly purchased over $6 billion during the first eight months of FY25. While this is part of a strategy to rebuild foreign exchange reserves, it has added to dollar demand and reduced market liquidity.
Najib explained that although Pakistan’s reserves have improved due to IMF support, strong remittance inflows, and debt rollovers, speculative pressures remain. Without major inflows or tighter monetary policy, the rupee may experience further depreciation in the near term.
Global Trends Influence Local Currency
On the global front, the US dollar gained strength on Wednesday, supported by rising Treasury yields and fresh inflation data. Analysts suggest the increase in inflation could be linked to renewed US tariffs under President Donald Trump. These measures are pushing the dollar higher while putting pressure on other currencies, including the Pakistani rupee and Japanese yen.
Read: KSE-100 Index Surges to New Highs as Reserves and Mutual Fund Inflows Boost Market
Gold Prices Drop Locally Despite Global Gains
In contrast to the strengthening dollar, gold prices in Pakistan dropped sharply on Wednesday. The price per tola fell by Rs3,000, bringing the rate down to Rs356,000. The 10-gram rate also declined by Rs2,572, closing at Rs305,212.
This marks a sharp fall from Tuesday’s rate, when gold was priced at Rs359,000 per tola following a Rs700 drop.
The local decline runs opposite to the international market, where gold prices rose slightly. Spot gold increased by 0.2% to $3,328.14 per ounce, while US gold futures dipped slightly to $3,333.60, according to Reuters.
Market Uncertainty Drives Gold Movements
Adnan Agar, Director at Interactive Commodities, attributed the recent global gains in gold to renewed concerns over US trade policies. He said Trump’s re-emerging tariff plans are making markets jittery and pushing investors toward safe-haven assets like gold.
Agar also noted strong technical support at $3,300 and predicted a trading range between $3,380 and $3,420 per ounce. He added that unless fresh geopolitical or economic developments shift sentiment, gold prices are likely to remain within that band.
Investor Sentiment Remains Cautious
Overall, investor sentiment in Pakistan remains cautious. Market participants are watching global trends, especially US monetary policy and tariff actions, as well as local developments like SBP’s forex strategy and import volumes.
While Pakistan has improved its forex reserves, pressure from dollar demand, debt payments, and weak market confidence continues to weigh on the rupee. At the same time, gold traders are closely watching global cues to anticipate further movement in prices.
Meanwhile, traders expect the rupee to stay under pressure in the coming weeks unless significant foreign inflows materialize. Importers are accelerating dollar purchases to hedge against further currency losses, while exporters remain on the sidelines, anticipating more favorable rates in the near term.
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