Understanding Forex Rates in Pakistan
The currency exchange market in Pakistan operates through two main channels: the Interbank market and the Open Market. The rates displayed here are Open Market Rates, which are generally applicable to individuals, travelers, and small businesses exchanging cash.
Why do Buying and Selling Rates Differ?
- Buying Rate: The rate at which money changers or banks will buy foreign currency from you. If you have Dollars and want Rupees, look at this rate.
- Selling Rate: The rate at which they will sell foreign currency to you. If you have Rupees and need Dollars for travel, look at this rate.
The difference between these two is known as the "spread," which covers the dealer's operational costs and profit margin.
What Drives Currency Rate Fluctuations?
The value of the Pakistani Rupee (PKR) is dynamic, influenced by a combination of domestic and international economic factors. Key drivers include:
- Foreign Remittances: As one of the largest recipients of remittances from overseas workers, this inflow of foreign currency is a primary source of support for the Rupee.
- Imports and Exports: A higher import bill (especially for oil and machinery) compared to export earnings creates a trade deficit, putting downward pressure on the Rupee.
- State Bank of Pakistan (SBP) Policies: The central bank's monetary policy, including interest rate adjustments and market interventions, plays a critical role in managing the Rupee's stability.
- Foreign Investment & Debt: Inflows from foreign direct investment (FDI) and loans from bodies like the IMF can provide short-term stability, but external debt servicing can strain reserves.