ISLAMABAD: The International Monetary Fund (IMF) has advised Pakistan government to adjust its currency against the US dollar in line with the Real Effective Exchange Rate (REER). It will lead to further depreciation of the rupee value.
The recommendation emerged during ongoing consultations between IMF officials and Pakistani authorities as part of broader economic policy discussions.
Officials familiar with the talks said the adjustment could push the Pakistani rupee to a range of Rs290 to Rs300 per US dollar. Currently, the local currency trades at around Rs280 per dollar. Therefore, aligning the exchange rate with REER indicators would reflect the country’s economic fundamentals more accurately.
IMF calls for exchange rate alignment
The IMF believes that Pakistan should maintain a flexible exchange rate to support macroeconomic stability. According to officials, the lender emphasized that aligning the rupee with REER benchmarks would reduce distortions in the currency market.
Moreover, the recommendation comes at a crucial time as Pakistan prepares its upcoming federal budget. Authorities are simultaneously in discussions with the IMF about fiscal measures and structural reforms to strengthen the economy.
Consequently, policymakers are reviewing options that balance economic stability with market realities. While exchange rate adjustments remain sensitive, experts say they can help correct external imbalances.
Impact on inflation and exports
However, a weaker rupee could create mixed economic outcomes. On one hand, depreciation may improve export competitiveness by making Pakistani goods cheaper in global markets. As a result, exporters could benefit from increased demand.
On the other hand, currency weakness may fuel inflation because Pakistan relies heavily on imported fuel, machinery, and raw materials. Higher import costs could therefore push consumer prices upward in the coming months.
Meanwhile, Pakistan continues to work with the IMF on fiscal consolidation, stronger revenue collection, and maintaining exchange rate flexibility.
