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 10.2% over the selected period — from -3.52B USD to -3.16B USD.
▸USD/PKR rose 60.2% over the selected period — from 173PKR to 277PKR.
▸Over this period, Trade Balance and USD/PKR showed a moderate relationship, moving in the same direction (correlation coefficient: 0.46).
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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