KARACHI: A sharp increase in trade deficit of as much as $32 billion threatens the balance of payments as the financial year is coming to a close and final payments are bound to be cleared before June 30, according to industry sources.

However, some financial experts said the “managed exchange rate” has produced negative results as it made the dollar cheaper, allowing importers of luxury items like costly new vehicles to exceed all limits.

The experts said that unlike Pakistan, the Indian rupee sharply fell by 10 per cent over the last 12 months and is still falling.

The Indian rupee recorded its lowest rate of Rs95.40 to a dollar this week. India also faces heavy outflows of foreign capital, particularly after the start of the Gulf war.

Experts say ‘managed exchange rate’ has allowed import of luxury items

The equity market in Pakistan has also witnessed massive outflows. According to State Bank data, inflows in the equity market during the first 10 months were $247 million while outflows were $884m.

Almost the same situation was witnessed with foreign investment in domestic bonds as 94 per cent left the country.

“If the war-like situation persists for another month, Pakistan could be in trouble since final payments at the end of the year are made while the cost of imported petroleum products would remain high, eating into our reserves,” said Faisal Mamsa, CEO of Tresmark. However, he did not agree that dollar is cheaper in Pakistan than in India.

Some currency dealers had already mentioned earlier that the crypto currency has attracted dollars at a price of up to Rs292. It shows that the rupee has still space to devalue to make the dollar costlier and stop the sharp jump in imports.

Fuel import bill

The prime minister said recently that the cost of imported oil was $300 million per week before the Gulf war, but it has now gone up to $800m. Most of the currency experts found it difficult to digest as it showed that the price of oil had shot up by 167 per cent.

The import data show that the import bill of petroleum products in first 10 months of the current financial year FY26 was still less than the same period of last fiscal year. During July-April, the cost of imported petroleum was $10.45bn against $11.25bn in the same period of last fiscal year.

The cheaper dollar made the difference as the import of Completely Built Unit (cars) during the 10 months reached $317m, compared to $76m last year.

Similarly, the import of completely knockdown units (CKD) during the first 10 months of FY26 reached $1.37bn, compared to $780m during the same period of last year.

The rupee traded as high as Rs306 in the interbank market in 2023, but was pulled back to Rs286 in Oct 2023. Since then the rupee hovered between Rs277 to Rs282 in the interbank market.

Since July FY26, the PKR has been appreciating inch by inch against US dollar and now available at below Rs280 per dollar.

“There is no doubt that the country would face current account deficit and the size of the deficit could hit hard the reserves of the country even if the inflow of remittance remained around $40bn,” said a financial expert.

Published in Dawn, May 7th, 2026