Rupee drops on importer dollar demand, depreciation fears

KARACHI: The Pakistani rupee fell on Wednesday due to increased dollar demand from importers and reports indicating that the local currency is expected to weaken gradually in the coming months.

The rupee closed at 280.96 against the dollar in the interbank market, down from the previous closing rate of 280.76. Fitch Ratings has predicted a gradual depreciation of the Pakistani rupee as economic activity in the country picks up, which could add pressure to the current account.

According to a Bloomberg report, Fitch anticipates that the rupee will fall to 285 against the US dollar by June 2025 and further to 295 by the end of the next fiscal year in June 2026. This forecast reflects Fitch’s expectation that the State Bank of Pakistan will allow the rupee to weaken gradually to alleviate current account pressures as the economy gains momentum.

In another important development, recent comments from the US president and treasury secretary, signalling a desire to avoid further escalation in the trade war and instead work towards a resolution, have provided a positive signal for global financial markets, said Chase Securities in a note.

“The current tariff levels appear unsustainable, and the move towards dialogue is seen as a welcome development. However, the US president continues to press for an interest rate cut, urging the Federal Reserve to take swift action,” it added.