Pakistan's monthly trade balance (exports minus imports) against the Rupee's exchange rate.
Pakistan's monthly trade balance (exports minus imports) against the Rupee's exchange rate.
▸Trade Balance rose 12.9% over the selected period — from -3.81B USD to -3.32B USD.
▸USD/PKR rose 78.6% over the selected period — from 156PKR to 279PKR.
▸Over this period, Trade Balance and USD/PKR moved closely together, moving in the same direction (correlation coefficient: 0.65).
Sources: SBP EasyData
A widening trade deficit increases demand for foreign currency to pay for imports, which has historically coincided with periods of faster Rupee depreciation.
Does a wider trade deficit cause the Rupee to fall?
It's a contributing pressure, not the sole cause — the exchange rate also reflects reserve levels, remittances, capital flows, and market expectations.
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