Pakistan’s rupee remained overvalued against the currencies of its major trading partners in June 2026, with the Real Effective Exchange Rate (REER) climbing to a seven-year high again.
Topline Securities said a rising REER (>100) suggests that the relative value of the home currency is becoming overvalued relative to peer countries.
According to the latest data, Pakistan’s REER rose to 106.44 in June from 106.08 in May, remaining well above its 10-year average of 102.52 and remaining at the earlier-reported 7-year high.
A REER reading above 100 generally indicates that a country’s currency is overvalued relative to those of its trading partners. While this can make imports cheaper, it also reduces the price competitiveness of exports in international markets.
Pakistan’s REER has been on a steady upward trajectory since early 2024, supported by macroeconomic stabilization, easing inflation differentials, and a relatively stable exchange rate.
PKR Overvalued? How?
REER measures the rupee’s value against the currencies of Pakistan’s major trading partners, adjusted for inflation. A reading above 100 generally means the rupee is overvalued in real terms relative to those currencies.
An overvalued rupee makes Pakistani goods more expensive for foreign buyers. It reduces their price competitiveness in international markets, while imports become relatively cheaper for domestic buyers.
A persistently high REER can therefore weigh on export growth and widen external imbalances, although exports are also influenced by factors such as global demand, productivity, and trade policies.
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