Pakistan’s rupee remained overvalued against the currencies of its major trading partners in July 2026, with the Real Effective Exchange Rate (REER) rising to 107.92, remaining at its 8-year high.
According to the latest State Bank of Pakistan data, Pakistan’s REER increased 1.49 percent month over month in July from 106.33 in June. The index has continued to rise in recent months, reaching 107.92 from 103.11 in February.
A REER reading above 100 generally indicates that the domestic currency is relatively stronger against the currencies of its trading partners after accounting for inflation. While a stronger rupee can make imports relatively cheaper, it can also reduce the price competitiveness of Pakistani exports.
An overvalued rupee can make Pakistani goods more expensive for foreign buyers, potentially making it harder for exporters to compete on price in international markets. At the same time, imports become relatively cheaper for domestic buyers.
The latest data shows the REER has moved steadily higher, from 103.11 in February to 104.29 in March, 105.84 in April, 106.08 in May, 106.33 in June and 107.92 in July. A persistently high REER can put pressure on export competitiveness, although export performance is also influenced by factors such as global demand, productivity, production costs and trade policies.
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