Rupee to remain range-bound next week

KARACHI: The rupee is expected to continue trading in a range-bound manner and is unlikely to experience significant fluctuations due to the new US tariffs, a report said on Saturday. This week, the rupee traded in narrow ranges during the two trading sessions after a long Eid break. It closed at 280.56 against the dollar in the interbank market on Thursday but ended at 280.47 on Friday. The markets were closed from March 31 to April 2 for the Eidul Fitr holidays.

On Wednesday, US President Donald Trump announced reciprocal tariffs on many countries, including 29 per cent on Pakistan. According to the Pakistan Business Council, the US is Pakistan’s largest single-country export destination and one from which it derives the largest trade surplus. In 2024, the US imported $5.46 billion of goods from Pakistan. This represented 17 per cent of the country’s total exports. In the same year, Pakistan recorded a trade surplus with the US of $3.33 billion. In the January-February 2025 period, Pakistan has exported $1 billion, at which rate, without the impact of higher tariffs, the projected exports to the US would amount to $6 billion.

In a client note, Tresmark discussed the impacts of US tariffs on the Pakistani currency, saying that the rupee faces a challenging situation with two key pressure factors:

Competitive advantage: Although Pakistan may have a slight edge, other countries might resort to currency devaluation to maintain their export competitiveness.

Demand destruction: With a slowdown in global trade, Pakistan could see a loss of $1 to $1.5 billion in exports, which represents a 3.0 per cent to 5.0 per cent reduction -- an amount that is significant. “In theory, the rupee should slip. But in reality, it probably will not -- not by much,” it said.

“With the government intent on showcasing an economic turnaround -- from IMF success stories to record-low inflation, 1,000bps in rate cuts, reduced energy tariffs, and a $36bn remittance windfall -- the last thing they want is a runaway rupee to upset the apple cart. Expect a managed slide -- maybe 5-10 paisa a week,” it added.

“Pakistan will need to sit down with the US and negotiate whatever favourable terms it can muster, but the key success factor would be how quickly rather than how much.”