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USD/PKR forecast: Will Pakistan’s rupee continue to fall?

By Nicole Willing

Edited by Vanessa Kintu


Portrait of Mohammad Ali Jinnah on a 1000 PKR banknote
The Pakistani rupee rebounded against the US dollar in October. – Photo: Bloomberg Creative Photos / Gettyimages

The start of 2023 has been far from pleasant for the Pakistani rupee (PKR), which fell 9.6%  aganist the US dollar (USD) on 26 January, this was the biggest one-day drop in over two decades, a slump which convinced the International Monetary Fund to resume its lending to the country. 

The currency hit a record low of around 280 in late January 2023. The PKR remains down by around 24% since the year-to-date (YTD), and 55% down since this time last year.

The Pakistani rupee (PKR) has continued to struggle against the US dollar (USD) since 2022 as the rupee crumpled against the US dollar in July 2022, as the greenback reached an all-time high in the interbank foreign exchange market. The USD was up 17% aganist the PKR in July. 

The rupee had seen a rebound in October 2022 but has since been in a downward trend as political turmoil, a fall in the country’s foreign exchange reserves and a rising risk of a debt default weigh on its value.

What drives the value of currencies, and what is the outlook for the rupee? In this article, we look at the performance of the Pakistani rupee against the US dollar, as well as the latest USD/PKR prediction and forecasts.

What drives the USD/PKR exchange rate?

In forex trading, the US dollar to Pakistan rupee (USD/PKR) currency pair represents how much of the quote currency – the rupee – is needed to buy one unit of the base currency – the US dollar. The number of rupees needed to buy one dollar reached a record high of 240.15 on 28 July. 

The value of a currency tends to be driven by the issuing nation’s economic growth, monetary policy (such as interest rates), and cross-border trade balance. These all determine the country’s attractiveness as an investment destination and the potential for the national currency to rise in value.

Pakistan is a consumption-based economy, relying on imports of commodities such as plastic, steel and chemicals for its manufacturing industry. The country’s imports have soared in the post-pandemic recovery. 

Pakistan’s trade deficit narrowed by 32.65% t to $17.133bn during the first half (July-December) of the current fiscal year, data released by the Pakistan Bureau of Statistics (PBS) showed.

In December 2021, the deficit was at $4.816bn. 

According to PBS data, the exports during July-December 2022/23 were recorded at $14.249 bn against the exports of $15.125bn in July-December of 2021-22, a decline of 5.79%. Meanwhile, imports decreased by 22.6% during the period. 

As the world’s reserve currency, the value of the USD is driven by sentiment on the global economy as well as economic activity in the US. The dollar acts as a safe haven for investors during times of economic and geopolitical uncertainty, which has been evident in 2022 as the greenback has soared in value to 20-year highs against a basket of other currencies.

Monetary policy on using higher interest rates to combat soaring inflation has also been a key driver for the dollar, with a series of interest rate hikes making the dollar more attractive for investors.

Historical USD/PKR performance

US dollar to Pakistani rupee (USD/PKR) 5-year forex chart

The rupee has been in a long-term decline against the dollar since the start of 2018 when it traded around the 110 level. The country has faced ballooning current and fiscal account deficits and repeated devaluations of the currency, which shifted from a managed rate against the US dollar to a free-floating exchange rate in 2018.

By the start of 2019, the US dollar/Pakistani rupee rate was trading around 140. It weakened over the summer to a record above 163, ending the year around 155. By the end of 2020, the rupee was trading at 160, with the Covid-19 pandemic driving up the value of the dollar.

The devaluation of the rupee accelerated in the second half of 2021, with the USD/PKR exchange rate breaching the 200 level for the first time in May, ending the year at 176.20. Local media reports indicated that $2m had been taken across the border from Pakistan into Afghanistan daily following the US withdrawal in August 2021 and the collapse of the Afghan banking system, contributing to a shortage of dollars in Pakistan.

PKR accelerated slide against USD

Pakistan’s foreign currency reserves were eroded further in 2022 as the country’s central bank, the State Bank of Pakistan (SBP) was using reserves to slow currency depreciation.

The USD/PKR pair traded between 176 and 182 in the first quarter but began to slump in April, when Pakistan’s Prime Minister, Imran Khan, was ousted in a no-confidence vote and the government collapsed. 

Currency dealers were also concerned that the International Monetary Fund (IMF) would halt its lending to the country while a new government was formed. In a statement in late April, the IMF said it would conduct a field mission in May “to resume discussions over policies for completing the 7th EFF review” under its Extended Fund Facility (EFF) program.

CPI inflation for Pakistan reached 27.6 percent on a year-on-year basis in January 2023 whereas for Jul-Jan FY 2022-23, it is recorded at 25.4 percent.

The Pakistan government also said: 

“Total revenues grew by 18.8 percent to reach PKR 4,699 billion during the first half of FY2022-23 against PKR 3,956 billion in the same period of last year. The major contribution to this growth came from 26.4 percent increase in non-tax collection, while tax collection has also shown remarkable performance by posting a growth of 17 percent.”
“Total expenditures for the first half of the current fiscal year increased by 19.8 percent to PKR 6,382 billion given the increase in mark-up payment which surged by 77 percent due to rise in debt servicing.”

On 21 January, the IMF said Pakistan's economy is coming out of a very strong 2022 with 6 percent growth, well above the world average. But in 2023, there is going to be a slowdown, and that's partly the end of the stimulus that was there from fiscal policy in 2022. That's going away.

“Unfortunately, we also had to downgrade the growth of forecast for Pakistan by one and a half percentage points for 2023. And that's because of the floods, which was a terrible supply shock, both reducing activity, but also raising inflation and putting various pressures on the country. Inflation, therefore, went up because of this. We see inflation reaching about 21 percent in 2023.”

To stabilise the economy and bring policies into line with the IMF’s requirements, Pakistan is expected to implement its financial year 2023 budget to reduce government borrowing, resume power-sector reforms, use monetary policy to bring down inflation from the 20% level, strengthen the social safety net to reduce poverty and strengthen governance. 


1.27 Price
+0.000% 1D Chg, %
Long position overnight fee -0.0047%
Short position overnight fee -0.0035%
Overnight fee time 21:00 (UTC)
Spread 0.00013


1.07 Price
-0.020% 1D Chg, %
Long position overnight fee -0.0087%
Short position overnight fee 0.0005%
Overnight fee time 21:00 (UTC)
Spread 0.00006


0.67 Price
+0.080% 1D Chg, %
Long position overnight fee -0.0067%
Short position overnight fee -0.0016%
Overnight fee time 21:00 (UTC)
Spread 0.00006


157.86 Price
+0.010% 1D Chg, %
Long position overnight fee 0.0110%
Short position overnight fee -0.0192%
Overnight fee time 21:00 (UTC)
Spread 0.010

On 14 February Fitch Ratings revised its outlook for Pakistan:

“Fitch Ratings has downgraded Pakistan's Long-Term Foreign-Currency Issuer Default Rating (IDR) to 'CCC-', from 'CCC+'. ”

Fitch noted that the downgrade reflects a further sharp deterioration in external liquidity and funding conditions, and the decline of foreign-exchange (FX) reserves to critically low levels. While Fitch assume a successful conclusion of the 9th review of Pakistan's IMF programme, the downgrade also reflects large risks to continued programme performance and funding, including in the run-up to this year's elections. Default or debt restructuring is an increasingly real possibility, in our view.

Fitch forecasts that Pakistan’s gross domestic product (GDP) growth could slow to 3.5% in the 2023 financial year, from 6% the previous year, because of “fiscal and monetary tightening, high imported inflation, and a weaker external demand outlook, all of which will also hit household and business confidence”. 

On 2 March, the State Bank of Pakistan’s Monetary Policy Committee raised its key interest rate by 300 basis points, exceeding investor expectations, as the cash-strapped country looks to the the International Monetary Fund to release critical financing.

The key rate of the SBP now stands at 20%, its highest its been since October 1996, with consumer price inflation now at its highest level for almost 50 years. 

The SBP said in a statement:

"The MPC noted that the recent fiscal adjustments and exchange rate depreciation have led to a significant deterioration in the near-term inflation outlook and a further upward drift in inflation expectations, as reflected in the latest wave of surveys."

How did the Pakistan economy perform in 2022?

The SBP sees inflation rising further before it falls. The central bank stated that the average inflation for the year is now expected in the range of 27-29% against the November 2022 projection of 21–23%.

Headline inflation soared to 26.6% in October, from 23.2% in September, as an electricity price cut was unwound. 

Food price inflation has accelerated because of crop damage from recent floods. Higher food prices and core inflation are now expected to increase average inflation for the financial year to June 2023 up to 21-23%. Despite a decline in imports reducing the current account deficit in September and October and a $1.5bn loan from the Asian Development Bank (ADB) approved in October, “external account challenges persist”, the MPC stated. 

Pakistan’s trade deficit narrowed to PKR640.6bn ($2.88bn) in November, from over PKR1trn in June, but was up by around 24% from October, according to Statistics Bureau data.

The rupee had found some relief in October, as trade data for September showed a 39.99% year-on-year (YOY) increase in exports in July-September in rupee terms, outpacing a 19.35% increase in imports. In dollar terms, imports fell by 12.37%, allowing more dollars to stay in the country.

The USD/PKR exchange rate moved up from 217.85 on 21 October to 220.40 at the end of the month, and rose to 221.75 on 3 November, when former Prime Minister Imran Khan was wounded in an assassination attempt. Khan has been calling for early elections since he was removed from office. He was disqualified from public office by the Election Commission of Pakistan on October 21. The next election is due in October 2023. Khan resumed his rallies on 26 November.

The rupee ended 2022 at 226.700 having fallen almost 30% throughout the the year.

The fall would continue in 2023 where it has so far slid 16% to trade at 270.27 as of 9 February. The same day, talks beween Pakistan and the IMF to unlock a $7bn bailout package remained inconclusive, suggesting the the country’s economy could continue to struggle.

What is a realistic USD/PKR prediction in the current environment? Read on for our USD/PKR forecast analysis.

USD/PKR forecast 2023: Will the rupee continue to weaken?

Analysts at Fitch Solutions expected Pakistan could fall into recession in 2023: 

“We at Fitch Solutions now expect Pakistan’s economy to contract by 0.3% in FY2022/23 (July-June), from 0.2% growth previously. This would mark a sharp deterioration from the 6.0% real GDP growth in FY2021/22. In addition to heavy flooding that began in mid-June and the continued shortage of foreign currency, headwinds to growth are intensifying due to rising domestic inflation and tighter monetary conditions globally, which will weigh further on external demand. These multiple headwinds will weigh on broad economy and result in a contraction in output, marking the second contraction in GDP growth in four years.”

The analysts added: “Supply shocks due to the loss of agricultural produce caused by the flood and higher domestic energy prices due to the rollback of energy subsidies and resumption of fuel taxation will intensify inflationary pressures. We forecast average inflation to rise from 12.1% y-o-y in FY2021/22 to 25.0% in FY2022/23. This is the highest level in over a decade, implying that household purchasing power will be under significant pressure.” 

At the time of writing on 9 February, an analysis by Trading Economics showed a USD/PKR forecast of 280.855 by the end of this quarter, with the rupee weakening further and the exchange moving to 300.945 in 12 months’ time, based on global macro models and analysts’ expectations. 

Algorithm-based services have issued varying USD/PKR forecasts, with some showing a weaker rupee against the dollar in the coming years.

Wallet Investor’s USD/PKR forecast for 2023 showed the pair trading at 294.922 by the end of the year. The site’s 2024 forecast showed the pair trading at a new high of 315.321 by the end of the year.

Gov Capital’s USD/PKR forecast for 2025 showed the pair trading at 637.974 at the end of the year, down from 225.6 at the end of 2023 and 311.713 at the end of 2023. Analysts and algorithm-based forecast platforms have yet to issue a USD/PKR forecast for 2030.

When considering any US Dollar/Pakistan rupee forecast, it’s important to remember that currency markets are highly volatile, making it difficult for analysts and algorithm-based forecasters to come up with accurate long-term predictions. 

We recommend that you always conduct your own research, looking at the latest news, technical and fundamental analysis, and analyst commentary before trading. Keep in mind that past performance is no guarantee of future returns. And never trade money you cannot afford to lose.


Why has USD/PKR been rising?

The USD/PKR exchange rate has been trending higher since October as political turmoil, a wide trade deficit and a strong US dollar weigh on the value of the rupee. The exchange rate reaced an all time high of 277 in January 2023.

Will USD/PKR go up or down?

At the time of writing, analysts and forecasters indicated that the value of the US dollar could continue rising against the Pakistani rupee, but the direction of the exchange rate could depend on economic activity and monetary policy in both the US and Pakistan, as well as the outcome of elections in Pakistan, among other factors.

When is the best time to trade USD/PKR?

Technically, you can trade currency pairs, including USD/PKR, around-the-clock. However, there are certain time slots when forex trading is most busy. This usually occurs between 08:00-12:00 ET, when US economic data is typically released. Whenever significant macroeconomic data is released or new central bank policies are unveiled, the USD/PKR pair’s volatility often tends to increase.

However, you should make trading decisions after performing your own research and remember that high volatility increases risks of losses. Keep in mind that past performance is no guarantee of future returns. And never invest money you cannot afford to lose.

Is USD/PKR a buy, sell or hold?

Whether you should trade the USD/PKR pair and the position you take is a personal decision depending on your risk tolerance and investing strategy. You should do your own research into the economic data, government policies and other factors that drive the exchange rate to make an informed decision. Keep in mind that past performance is no guarantee of future returns. And never invest money you cannot afford to lose.

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