Pakistan’s financial landscape experienced a significant boost as the State Bank of Pakistan (SBP) reserves increased by $70 million, reaching $10.7 billion for the week ending March 28, 2025. The overall liquid foreign reserves reached $15.6 billion, with commercial banks holding $4.9 billion. However, these gains are threatened by impending U.S. tariffs and a depreciating rupee.
On Thursday, the Pakistani rupee weakened by 0.14% against the U.S. dollar, closing at 280.56—a drop of Rs0.40. This dip aligns with global shifts after President Donald Trump unveiled aggressive tariffs targeting 60 countries, including a 29% levy on Pakistan, effective April 9. The U.S. dollar softened internationally, boosting the euro, as markets braced for trade fallout.
Tariffs, Trade, and Remittance Challenges
The tariffs pose a significant threat to Pakistan’s economy, which has faced challenges due to stagnant exports to the U.S. These exports have remained at $5 billion for over 20 years. Additionally, the strain is exacerbated by profits from foreign direct investment, earnings from banks, and import bills primarily associated with foreign-owned banks. Experts are calling for a reassessment of export strategies, which rely heavily on raw goods such as rice and cotton but lack value-added products and global reach.
Read: Wall Street Plunges as Trump Tariffs Spark Chaos
Remittances, which serve as a vital support for many, are projected to reach $3.5 billion in March, a rise from $3.2 billion in February, defying typical post-Ramazan trends. However, unofficial channels continue to divert a significant portion of these potential gains. With 2.5 million Pakistanis migrating in the past three years, joining the existing 12 million living abroad, the annual growth rate for remittances hovers around 8-10%, considerably lower than the 20% growth experienced by other countries. Analysts suggest that providing incentives for exchange firms and expatriates could help mitigate the negative impacts of tariffs.
Read: Gold Prices Hit Record $3,127.88 Amid Trump’s Trade Tariff Push
Gold prices in Pakistan mirrored global trends, soaring to a record Rs325,500 per tola on Thursday, up Rs500 per day, according to the All-Pakistan Gems and Jewellers Sarafa Association. The spike reflects safe-haven demand amid tariff uncertainty, piling pressure on an economy navigating reserve growth and trade headwinds.
