Pakistan’s Real Effective Exchange Rate (REER) rose to 106.15 in May 2026, up from 105.84 in April, remaining at its highest level in seven years, according to data compiled by the State Bank of Pakistan and Topline Securities.
The latest reading is also above Pakistan’s 10-year average REER level of 102.59, indicating that the rupee remains relatively stronger compared to the currencies of its major trading partners.
A REER reading above 100 generally suggests that a country’s currency is becoming overvalued relative to peer economies, potentially making exports less competitive and imports relatively cheaper.
Pakistan’s REER has been steadily increasing since early 2024, recovering from lows recorded in 2023 and reflecting improved macroeconomic stability, lower inflation differentials, and a relatively stable exchange rate.
A persistently elevated REER could pose challenges for the country’s export-led growth ambitions, particularly at a time when policymakers are seeking to boost exports and narrow external imbalances.
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