Pakistan’s currency may remain stable in the short term but faces mounting medium-term risks from volatile oil prices, potential remittance slowdowns and tightening global financial conditions, according to a new analysis by financial advisory firm Tresmark.
In a report titled “Oil, Remittances and the Next Rupee Test,” Tresmark said Ramadan-related remittance inflows and manageable foreign-exchange liquidity are likely to keep the rupee broadly range-bound in the coming weeks, even as export inflows have slowed slightly. The firm noted that authorities appear to be staggering import payments to prevent pressure in the interbank market.
However, the report warned that two immediate cash-flow pressures lie ahead: a heavy oil payment cycle expected after Eid and more than $1 billion in upcoming Eurobond repayments.
Looking further ahead, Tresmark said the outlook becomes significantly more uncertain as geopolitical tensions reshape global energy markets. The firm argued that oil is increasingly behaving “less like a commodity and more like a strategic asset,” with the Strait of Hormuz emerging as a critical pricing risk amid fears of supply disruptions.
Higher and more volatile energy prices could create a new macroeconomic environment marked by persistent energy inflation, volatile global trade flows and increased uncertainty for import-dependent economies such as Pakistan.
The report also flagged remittances as a growing vulnerability. While overseas inflows have long cushioned Pakistan’s external account, a slowdown in Gulf economies could weaken labor demand and gradually reduce remittance inflows.
At the same time, global investor sentiment toward emerging markets is deteriorating. Tresmark noted that Pakistan’s Eurobond yields and credit default swap spreads have widened by roughly 100 basis points, signaling rising risk perceptions among external investors.
Despite these pressures, the firm said Pakistan is unlikely to spend foreign-exchange reserves aggressively to defend the rupee. Instead, adjustment would likely come through tighter import management and gradual currency depreciation rather than any abrupt devaluation.