REER index drops to 101.6 in March

KARACHI: Pakistan’s real effective exchange rate (REER), which shows the competitiveness of the local currency against trading partners, depreciated to 101.6 in March from 102.2 in the previous month, the central bank data showed on Thursday.

The rupee ended weaker, retreating from the previous session’s gains, weighed down by dollar demand from importers.The rupee closed at 280.61 to the dollar in the interbank market, down from 280.46 on Wednesday.

Dealers said that the local currency fell due to importers’ demand for dollars surpassing the supply from exporters' conversions. The rupee’s drop occurred despite two notable positives this week: Fitch’s credit rating upgrade and the highest monthly current account surplus.

On Tuesday, Fitch upgraded Pakistan’s Long-Term Foreign-Currency Issuer Default Rating by one notch to ‘B-’ from ‘CCC+’ with a stable outlook due to improved fiscal consolidation and structural reform momentum under the International Monetary Fund’s (IMF) loan programme.

The government has achieved a record monthly current account surplus of $1.2 billion in March, resulting in a total surplus of $1.9 billion for the first nine months of fiscal year 2025, attributed to record remittances of $4.1 billion.