KARACHI
\nThe first half of the current fiscal year saw the rupee post a net gain against the US dollar of Rs5.066, or 1.8 per cent, although it remains weaker than its level at the beginning of 2025.
\nThe dollar closed at Rs280.13 in the interbank market on Friday compared to Rs285.22 on July 2, 2025. However, the rupee is still below its level on Jan 3, 2025, when the dollar traded at Rs278.56.
\nCurrency market participants said the exchange rate remained \u201cmanaged\u201d but noted that the recent appreciation had helped stabilise the market and provided greater confidence for exporters and importers.
\nIn a report issued on Saturday, Tresmark CEO Faisal Mamsa said the rupee\u2019s behaviour often defies traditional valuation models because it moves in \u201cregime shifts\u201d, not smooth cycles.
\n\u201cThis history explains why models such as PPP, BEER or even simplified REER frameworks struggle with PKR. They assume stable policy regimes, political stability and continuous calibration. But PKR operates in regime shifts, not smooth cycles,\u201d he wrote.
\nPPP refers to Purchasing Power Parity, which compares price levels to estimate a fair exchange rate, while BEER (the Behavioural Equilibrium Exchange Rate) uses economic fundamentals such as productivity and interest-rate differentials to gauge a currency\u2019s value.
\n\u201cValuation matters in normal times. But at moments that define PKR\u2019s trajectory, sentiment and policy dominate valuation. That is when these models offer false comfort,\u201d Mr Mamsa said.
\nReviewing major episodes in 2008, 2018 and 2022, he said past crises were typically triggered by factors outside the foreign exchange market, including political instability and policy paralysis, oil price spikes and inflation surges, geopolitical shocks and IMF programme disruptions.
\n\u201cIn each case, the initial trigger came from outside the FX (foreign exchange) market. The rupee was not the cause, it became the transmission channel,\u201d he said.
\nSeveral currency analysts expect renewed dollar strength in calendar year 2026 despite higher foreign exchange reserves held by the State Bank of Pakistan, arguing that reserves alone may not offset widening trade and current account pressures, which have already started showing spikes in FY26.
\nThey noted that import compression in November helped deliver a current account surplus but warned that further cuts could weigh on economic growth. Weak GDP growth has become a challenge for a government seeking to attract both foreign and domestic investment, they said.<\/p>\n","protected":false},"excerpt":{"rendered":"
KARACHI The first half of the current fiscal year saw the rupee post a net gain against the US dollar of Rs5.066, or 1.8 per cent, although it remains weaker than its level at the beginning of 2025. The dollar closed at Rs280.13 in the interbank market on Friday compared to Rs285.22 on July 2, […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":["post-522697","post","type-post","status-publish","format-standard","category-business"],"yoast_head":"\n