Pakistan’s Real Effective Exchange Rate Drops Again, Rupee Still Overvalued

Pakistan’s Real Effective Exchange Rate (REER) dropped to 102.5 in February 2026, compared to 103.3 in January 2026, latest central bank data showed on Monday.

REER measures the value of a country’s currency against a basket of trading partners. A reading above 100 suggests that the local currency is relatively overvalued compared to peer economies, while a lower reading signals improving competitiveness.

Despite the latest decline, Pakistan’s REER staying above the long-term average indicates that the rupee still carries mild overvaluation pressure.

The Pakistani rupee will likely continue to strengthen modestly against the US dollar. It closed at 279.3/$ today.