Pakistan’s Real Effective Exchange Rate Rises to 101.73 in September 2025

Pakistan’s Real Effective Exchange Rate (REER) climbed to 101.73 in September 2025, up from 100.09 in August, reflecting a 1.64% month-on-month increase, according to fresh data from the State Bank of Pakistan (SBP). The rise indicates a stronger rupee against a basket of trading partner currencies, signaling a gradual appreciation trend in recent months.

The REER index measures the value of Pakistan’s currency relative to a basket of major trading partners, adjusted for inflation. A reading above 100 typically points to a potential overvaluation of the rupee, which could affect export competitiveness, while a value below 100 suggests undervaluation.

Key REER Data Overview

Since the beginning of FY26, the REER has risen 3.77%, though it remains down 1.87% on a calendar year-to-date basis (CY25TD).

Expert Insights

Analysts believe the appreciation reflects the rupee’s recent stability, supported by stronger foreign reserves, improved current account management, and reduced import demand. However, they caution that sustained appreciation may hurt exports if local inflation remains high.

“While the rising REER indicates relative currency strength, maintaining export competitiveness will require careful balancing of exchange rate and inflation policies,” said a senior economist at a Karachi-based think tank.

The SBP is expected to continue monitoring external and domestic factors to ensure exchange rate stability while supporting export-driven growth.