Pakistan’s rupee became more overvalued against the currencies of its major trading partners in July 2026, with the Real Effective Exchange Rate (REER) rising to 107.92, according to the latest data from the State Bank of Pakistan.
The REER increased by 1.49 percent month over month, climbing from 106.33 in June to 107.92 in July. The latest reading represents the highest level recorded in the recent data and indicates continued real appreciation of the Pakistani rupee.
The REER is an important indicator used to assess the value of a country’s currency against the currencies of its major trading partners while taking inflation differences into account.
A REER reading above 100 generally indicates that the domestic currency is relatively stronger in real terms compared with the currencies of trading partners. In Pakistan’s case, the latest reading suggests that the rupee remains relatively strong after accounting for inflation.
The upward movement has been consistent in recent months. Pakistan’s REER stood at 103.11 in February before increasing to 104.29 in March and 105.84 in April.
The index then rose to 106.08 in May and 106.33 in June before reaching 107.92 in July. The continued increase indicates that the rupee’s real value has strengthened steadily over the period.
A stronger rupee can provide some benefits to consumers and businesses that rely on imported goods. Imports can become relatively cheaper, potentially reducing the local cost of imported raw materials, machinery, fuel, and other products.
However, a persistently high REER can create challenges for exporters. Pakistani products may become relatively more expensive for international buyers, potentially reducing the country’s price competitiveness in overseas markets.
Export-oriented industries could therefore face additional pressure if the trend continues. Businesses competing with producers from countries whose currencies are relatively weaker may find it more difficult to maintain competitive prices in international markets.
The impact of an overvalued currency is not limited to exchange rates alone. Pakistan’s export performance is also influenced by global demand, productivity, production costs, energy prices, taxation, infrastructure, and government trade policies.
The latest REER data therefore does not necessarily mean that exports will automatically decline. Instead, it highlights one factor that can influence the competitiveness of Pakistani exporters.
For importers and consumers, the situation can be different. A stronger real exchange rate can make imported products and inputs relatively more affordable, particularly when global prices remain stable.
For policymakers, maintaining a balance between currency stability, inflation, import costs, and export competitiveness remains important. An excessively strong real exchange rate could create difficulties for exporters, while sharp currency depreciation could increase inflation and raise the cost of imports.
The rise in Pakistan’s REER from 103.11 in February to 107.92 in July highlights the changing dynamics of the country’s external competitiveness. The latest data will likely remain an important indicator for policymakers, exporters, and investors monitoring the outlook for the Pakistani economy.
