The Pakistani rupee is on a steady climb, recording its longest stretch of gains since April 2024—a sign that government and central bank efforts to stabilize the currency may finally be paying off.
This turnaround follows a tactical slowdown in dollar purchases by the State Bank of Pakistan (SBP), a move aimed at easing pressure on the foreign exchange market without derailing the buildup of the country’s reserves.
Coordinated Push Against Dollar Smuggling
A crucial factor behind the rupee’s resurgence has been the government’s intensified crackdown on illegal dollar trading. Authorities, including security and intelligence agencies, have been actively targeting the black market, a persistent source of volatility for the currency.
These enforcement actions, combined with behind-the-scenes meetings involving military officials, top bankers, and foreign exchange associations, appear to have restored some order to Pakistan’s chaotic currency markets. While the Inter-Services Intelligence (ISI) has remained tight-lipped, its reported involvement underscores the high-level attention the rupee’s stability is receiving.
Market Reaction: Confidence Seeping Back In
In the open market, the rupee edged up to 285.15 per dollar from 285.25 a day earlier, according to data from the Exchange Companies Association of Pakistan (ECAP). While the gain may seem marginal, it’s symbolic of growing market confidence—especially given the sharp losses seen earlier in July.
Reserves Climb, But Central Bank Treads Carefully
Foreign exchange reserves are also recovering, with the SBP reporting a 26% jump in June to $14.5 billion. The bank projects that reserves could rise to $15.5 billion by the end of 2025, though it remains cautious about the pace of this buildup.
SBP Governor Jameel Ahmad emphasized that while growing reserves is a priority, the central bank will avoid aggressive dollar buying that could reverse the rupee’s progress.
