REER hits 8-month high in December

KARACHI: Pakistan’s real effective exchange rate (REER) rose to the highest level in eight months in December, data from the State Bank of Pakistan showed on Friday.

REER shows the competitiveness of the local currency against trading partners. It appreciated to 103.7 in December, the highest since April 2024. It stood at 103.2 in the previous month. So far this year, REER has increased by 3.63 per cent. The rupee recovered slightly from the losses it experienced in the previous session, closing stronger on Friday at 278.71 per dollar, compared with 278.86 in the prior session.

In the open market, however, the rupee lost some ground, finishing at 280.99 to the dollar, down from 280.94 in the previous session. According to reports, exchange companies sold $2 billion to banks and another $2 billion in the open market during the first half of fiscal year 2025. Pakistan is on track to reach $35 billion in remittances, representing a 33 per cent increase from last year. Improved inflows and efforts to crack down on illegal currency trading have been attributed to a stable exchange rate. Additionally, exchange companies are seeking equal incentives to those offered to banks.