Pakistan’s current account deficit narrowed to $98 million in August 2026, according to data released by the State Bank of Pakistan (SBP) on Wednesday.
The latest deficit was significantly lower than the $445 million deficit recorded in July 2026.
However, it remained higher than the $324 million deficit recorded in August 2025.
Imports Rise Faster Than Exports
Pakistan’s external account came under pressure from a higher import bill during August.
Total exports of goods and services reached $3.33 billion during the month.
Exports increased by more than 5% compared with $3.17 billion in August 2025.
Meanwhile, total imports rose to $6.64 billion.
Imports increased by more than 8% from $6.15 billion recorded during the same month last year.
The faster growth in imports contributed to the monthly current account deficit.
Remittances Provide Support
Workers’ remittances provided significant support to Pakistan’s external account during August.
Remittance inflows reached $3.66 billion during the month.
The figure was nearly 17% higher than the $3.14 billion recorded in August 2025.
The increase in remittances helped offset some pressure created by the wider import bill.
Current Account Deficit Falls in First Two Months
During the first two months of fiscal year 2026-27, Pakistan recorded a cumulative current account deficit of $543 million.
The figure was lower than the $853 million deficit recorded during the same period of the previous fiscal year.
This represents a decline of around 36% year-on-year.
The improvement indicates that stronger remittance inflows and higher exports have partly supported Pakistan’s external position.
Foreign Exchange Reserves Rise
Pakistan’s foreign exchange reserves, excluding CRR and SCRR, increased to $17.28 billion.
The reserves were around 19% higher compared with the same period last year.
Higher reserves provide stronger external buffers as Pakistan continues to manage pressure from imports and the current account.
Pakistan’s REER Index
Pakistan’s Real Effective Exchange Rate, or REER, increased marginally in August.
The REER rose by 0.02% to 107.92 in August from 107.89 in July 2026.
According to the SBP, a REER above 100 indicates that exports are relatively less competitive while imports become relatively cheaper.
The situation generally reverses when the REER falls below 100.
Meanwhile, Pakistan’s Nominal Effective Exchange Rate Index, or NEER, declined by 0.79% month-on-month in August.
The provisional NEER value fell to 38.02 from 38.32 in July.
What Is REER?
REER measures the relative price of goods in Pakistan against the prices of goods in its major trading partners.
The calculation uses nominal exchange rates and adjusts prices according to the country’s trade relationships.
The index considers the relative importance of trading partners based on their shares in Pakistan’s imports, exports or total foreign trade.
The latest SBP data shows that Pakistan’s current account position improved considerably from July, although the country continues to face pressure from rising imports.
