KARACHI: The US dollar’s recent depreciation against the Pakistani rupee has sparked warnings from industry and financial experts about potential negative repercussions for the economy.
After falling below Rs280 on Monday, the dollar was trading at Rs279.91 on Tuesday, with analysts anticipating a further, albeit slower, decline.
While the exchange rate is being actively managed and has so far helped stabilize the economy externally, experts caution that continued depreciation could affect exporters’ behavior. “If the dollar falls further, exporters may withhold part of their proceeds, hoping to sell at a more favorable rate,” said a currency analyst.
Export proceeds are currently under strict monitoring by the State Bank of Pakistan (SBP), limiting sales outside official channels. However, currency dealers note that opportunities still exist in alternative markets.
Faisal Mamsa, CEO of Tresmark, warned that further dollar depreciation could negatively impact remittances, citing past instances where the currency moved into the black market. “The turning point came when sentiment deteriorated. As confidence weakened, flows slowed, and expectations shifted abruptly. The rupee’s movement became sentiment-driven rather than valuation-driven, making policy responses critical,” he explained.
Some dealers noted that remittance senders could sell dollars before bringing them into the country, which may further influence market sentiment. Despite this, remittances have risen 10.6% during the first six months of FY26. Exchange companies sold around $1.4 billion to banks during July–December FY26, compared with roughly $2 billion in the same period last year.
Currency experts suggest that maintaining the dollar near Rs280 is preferable, as further depreciation could divert funds toward the crypto market, which has already attracted an estimated $800 million this year.
Meanwhile, exporters are increasingly investing abroad. Pakistan’s largest garment exporter, Interloop, has established a unit in Egypt. Analysts warn that heavy domestic taxes and limited incentives may drive more exporters to seek opportunities overseas, compounding the economic impact of a weakening dollar.
