Pakistan's Real Effective Exchange Rate (REER) declined to 99.4 in April 2025, down from 101.6 in March 2025, according to data from the State Bank of Pakistan (SBP). This 2.2% month-on-month drop suggests a modest improvement in export competitiveness, as a REER below 100 indicates the Pakistani rupee is undervalued relative to trading partners.
REER had peaked at 104.1 earlier in the fiscal year before trending downwards. Analysts note that while the decline could benefit exporters by making Pakistani goods more competitive globally, it may also reflect underlying economic pressures, such as inflation differentials or exchange rate adjustments.
Market observers, including Arif Habib Securities, highlight that future REER stability will hinge on inflationary trends and external trade conditions.
Meanwhile, the Pakistani rupee recorded a slight depreciation against the US dollar, slipping 0.02% in the inter-bank market on Friday. By the end of trading, the rupee closed at 281.66, down Rs0.05 from the previous day's rate of 281.61.
Moreover, on May 16, the SBP injected a total of Rs869.65 billion into the financial system through two open market operations (OMOs). The first operation was a Shariah-compliant Mudarabah-based OMO, totalling Rs291 billion, with Rs145.2 billion accepted for seven days at 11.09% and Rs145.8 billion for 14 days at 11.10%.
The second operation was a conventional reverse repo OMO, amounting to Rs578.65 billion, including Rs223.65 billion for seven days at 11.08% and Rs355 billion for 14 days at 11.05%.
Meanwhile, gold prices in Pakistan increased marginally on Friday, mirroring trends in the international market, where gold saw a significant decline of over 2% — its steepest weekly loss since November— amid improved investor sentiment following progress in the US-China trade agreement.
In the local market, the price of gold per tola increased only by Rs900, reaching Rs336,100, according to the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA). Similarly, the price of 10-gram gold rose Rs772, settling at Rs288,151. This followed a sharp drop on Thursday, when the price per tola had plunged by Rs6,700 to Rs335,200.
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