Efforts by the Pakistani government to stabilize the rupee around the Rs. 250 mark against the US dollar appear to be falling short, as the currency continues to trade well above official expectations in both interbank and open markets.
Despite launching an aggressive campaign against currency smuggling on July 23, the rupee has managed only a modest recovery—gaining around Rs. 3 in recent days. Yet, this limited appreciation has done little to align the rupee with the government’s target, with the dollar still hovering at Rs. 285.15 in open trading and Rs. 282.87 in the interbank market as of Wednesday.
Targeted Rate Seen as Unrealistic by Market Stakeholders
Behind closed doors in Islamabad, government officials have been urging stakeholders—including bankers, currency dealers, and jewellers—to support an exchange rate near Rs. 250 per dollar. But the market isn’t buying it.
According to multiple sources involved in the meetings, participants labeled the target “unrealistic,” pointing to economic fundamentals that do not support such an aggressive revaluation of the rupee.
Currency dealers also report a growing scarcity of foreign currencies like the US dollar, euro, and British pound. However, many argue the perceived shortage isn’t necessarily about dwindling supply—it’s about the market rejecting state-imposed price ceilings.
Parallel Market Gains Momentum Amid Pricing Pressures
With official exchange rates failing to reflect true demand, a parallel market is reportedly regaining traction. These unofficial channels are offering higher returns than those posted by the Exchange Companies Association of Pakistan (ECAP), attracting both buyers and sellers looking to bypass the restrictions of the formal financial system.
In the regulated interbank space, authorized banks are allegedly favoring their own clients, quoting higher rates for dollar sales and adding to the pressure on smaller importers and general market liquidity.
Macroeconomic Reality vs. Policy Optimism
Analysts caution that the government’s aspirations for a Rs. 250 exchange rate lack economic grounding. Pakistan’s import bill has already increased in FY25 compared to the previous fiscal year, pushing up demand for foreign currency.
Without stronger economic fundamentals—such as increased exports, higher foreign reserves, or improved investor confidence—the rupee’s path to Rs. 250 appears more political than practical.
For now, the gap between official expectations and actual market conditions continues to widen, fueling speculation, uncertainty, and renewed dependence on the informal currency trade.
