Few currencies have such a clear division between two stories. One is about the rupee as a number on a rate board: how many to the dollar, and how that changed. The other is about the rupee as the thing a family in Faisalabad actually spends, after a relative abroad has sent money home. The first story is mostly about the State Bank and the IMF. The second is mostly about remittances.
This guide covers both, with dates where we could verify them. It does not repeat the mechanics of sending money from the Gulf or the UK, which have their own guides.
How the rupee became Pakistan’s own
At independence in 1947, Pakistan had no currency of its own. For roughly the first two years the Reserve Bank of India acted as the temporary monetary authority, and the first notes were Indian notes inscribed for Pakistan. The government of Pakistan adopted the rupee officially in 1949, and the State Bank of Pakistan (SBP) later took over note issue.
| Year | Event |
|---|---|
| 1955 | Rupee devalued by about 30% against the US dollar, to match the Indian rupee |
| 1961 | Decimalised: one rupee becomes 100 pice (later called paisa) |
| 1972 | Devalued to about 11 rupees per dollar |
| 1982 | Sterling peg replaced by a managed float |
| 2008 | Fell about 23% between December 2007 and August 2008, to roughly 79.20 per dollar |
| 2013 | Paisa coins stop being legal tender; the one rupee coin is the smallest |
That is a long run of weakening, and it matters for how Pakistanis think about money. Someone who was a child in 1972, when the rate was about 11, has since watched it climb into the hundreds.
What the State Bank does, and what the IMF asked for
Pakistan’s central bank is the SBP. It issues the currency, sets the policy interest rate and publishes exchange rates. What it does not do, at least on paper under current IMF programmes, is fix the dollar rate.
Recent history is specific here. In July 2023 Pakistan agreed a three billion dollar loan programme with the IMF to avoid sovereign default. Under it the IMF told the authorities to limit the premium between the interbank rate and the open-market rate to 1.25% over any five business days. In early September 2023 the gap had narrowed to 1.6%, after a crackdown on informal currency dealers. The SBP also ordered banks to set up separate entities for forex business and raised the minimum capital for exchange companies from 200 million to 500 million rupees.
Today’s programme is bigger. On 25 September 2024 the IMF’s Executive Board approved a 37-month Extended Fund Facility worth about seven billion dollars (SDR 5,320 million). A separate Resilience and Sustainability Facility of about 1.4 billion dollars sits alongside it. The IMF’s own language is blunt on the rate: the exchange rate should serve as a shock absorber. In March 2026 it repeated that exchange rate flexibility should continue as the primary shock absorber, including against spillovers from the Middle East conflict. A third review of the main programme was completed by the Board on 8 May 2026, releasing about 1.1 billion dollars, plus about 220 million under the sustainability facility.
In January 2024 Pakistan also told the IMF, in a policy memorandum reported by the press, that banks and exchange companies are at liberty to set their own rates, that the government will not guide the market, and that daily interbank and open-market rates would be published. That is the regime in a sentence: a market-determined rupee, watched closely, with a central bank that also buys dollars to build reserves.
What the rate looks like now
As of late October 2026, the interbank rate was about 276.80 rupees to the dollar. The open market was quoted at 277.50 to buy and 280.00 to sell, according to a Pakistani news report on 27 October 2026. Compare that with September 2023, when the interbank rate was around 306.98. The dollar costs about 10% fewer rupees than it did then, although what the rate does next is something no one can state with confidence.
Consider the gap between the two rates. Suppose you hold 1,000 dollars in cash. At 277.50 you would get 277,500 rupees. Buying the same dollars back at 280.00 would cost 280,000. That is 2,500 rupees, or about 0.9%, lost on the round trip, purely from the dealer’s spread. The gap between the open-market selling rate and the interbank rate is about 1.2%. These numbers move daily and differ by dealer, so use them as an example of scale, not as a quote. You can see the current mid-market figure on USD to PKR, refreshed hourly.
Interest rates and inflation
The SBP’s policy rate was raised by 100 basis points to 11.5% on 27 April 2026, the only increase in the financial year to June 2026, and was held there at each meeting since, most recently on 14 September 2026. Inflation has been the driver. Press reports of the SBP’s June statement put headline inflation at 7.3% in March 2026, 10.9% in April and 11.7% in May, with the bank expecting double-digit readings for a few months before a gradual easing. Its medium-term target range is 5% to 7%. Different outlets gave slightly different August figures, so check the Pakistan Bureau of Statistics for the latest.
In its June 2026 review the SBP cited the Middle East conflict and oil prices as feeding into domestic inflation, and the IMF flagged the same energy-price risk in March. Whatever happens to prices at home tends to show up in the rupee’s value sooner or later.
Why remittances matter so much
Pakistan earns dollars by exporting and by receiving money from workers abroad, and the second source is large. The SBP reported workers’ remittances of 41.585 billion dollars for the financial year to June 2026, up 8.6% from 38.3 billion the year before. The biggest sources were Saudi Arabia at about 9.8 billion, the UAE at about 8.8 billion and the UK at about 6.3 billion, followed by other Gulf states and the United States.
Put in proportion: Saudi Arabia alone accounted for about 24% of the year’s total, the UAE about 21% and the UK about 15%. So a policy change in a Gulf labour market, or a wage change in a British care sector, can matter to Pakistan’s foreign exchange position.
For a recipient family, the macro picture shows up in two places. Inflows that are steady help the State Bank rebuild reserves, which supports a steadier rupee. And the rupees a household gets are only worth what they buy, so inflation at double digits eats into them faster than a favourable exchange rate adds.
Practical tips
Start with a worked example. Say a sender transfers 500 dollars when the interbank rate is 276.80. At that rate the family should receive 138,400 rupees. A provider quoting 274.50 pays out 137,250, which is 1,150 rupees less, or about 0.8%. All of that comes before any flat fee. The difference is invisible unless you do the sum. These figures are illustrative.
- Compare the rupee amount that will land, using a reference rate you can check, rather than the headline fee.
- Use licensed banks and exchange companies. The SBP raised minimum capital for exchange companies in 2023 after a crackdown on informal dealers.
- If you hold rupees for more than a few months, compare the interest you earn with annual inflation, not with zero.
- Check the open-market buying and selling rates separately if you deal in cash. The spread is the cost.
For related pairs, the South Asia page lists regional currencies together, and the PKR page shows the main crosses.
Both are true of the rupee: it has a long record of falling and a recent record of holding steady. The IMF programme, the State Bank’s reserves and the next oil price all matter, and none of them is knowable in advance. Do the arithmetic on the amount you actually move.
Sources
- Pakistani rupee (history)
- IMF: Executive Board approves 37-month Extended Arrangement for Pakistan
- IMF: Staff-level agreement on the third review, March 2026
- Arab News: IMF board clears $1.32 billion disbursements for Pakistan
- Dawn: Interbank, kerb rates edge closer to IMF’s 1.25pc target
- ProPakistani: Pakistan assures IMF to maintain a market-determined exchange rate
- Dawn: Central bank keeps policy rate unchanged at 11.5pc
- ARY News: SBP retains interest rate at 11.5 percent
- APP: Workers’ remittances soar to US$41.6 billion during FY26
- PKRevenue: PKR vs USD interbank rates, 27 October 2026
Checked: November 2026
