The State Bank of Pakistan (SBP) has released the final mark-to-market (M2M) currency rates for US Dollar (USD) and major international currencies against the Pakistani Rupee (PKR) as of December 31, 2025.These official rates, essential for authorized currency dealers to revalue their portfolios daily, are calculated using the weighted average of interbank closing rates for the US Dollar from brokerage houses, with other currency valuations derived from USD/PKR data combined with their respective USD exchange rates on LSEG Workspace.US Dollar Maintains Stable Position as Year EndsThe US Dollar (USD) demonstrated notable stability on the final trading day of 2025, valued at 278.5887 PKR in the spot market, with forward contracts extending to 290.1413 PKR for one-year tenors. This represents a measured exchange environment as Pakistan concludes the year with improved macroeconomic indicators and sustained foreign exchange reserves. The forward premium of approximately 11.5 PKR suggests market participants expect gradual depreciation pressures in 2026, though the differential remains within manageable parameters compared to historical volatility.Currency analysts note that the USD’s stability reflects Pakistan’s successful navigation of external pressures throughout 2025, including disciplined monetary policy implementation and improved fiscal management. The year-end positioning indicates cautious optimism heading into the new year.Gulf Currencies Display Characteristic StrengthSaudi Riyal and UAE Dirham Lead Regional StabilityThe Saudi Riyal (SAR) held firm at 74.2420 PKR for spot transactions, with annual forward rates reaching 77.6063 PKR. This stability underscores the sustained economic relationship between Pakistan and Saudi Arabia, supported by robust bilateral trade, investment flows, and significant remittances from the Pakistani diaspora working in the Kingdom.The United Arab Emirates Dirham (AED) was positioned at 75.8447 PKR in immediate exchanges, advancing to 79.8032 PKR over twelve-month contracts. The UAE continues to be Pakistan’s largest trading partner in the Gulf region, with the dirham’s strength reflecting the Emirates’ diversified economy and stable fiscal position. The forward premium of approximately 4 PKR indicates market expectations of modest PKR depreciation against the AED through 2026.Qatari Riyal and Kuwaiti Dinar Maintain Premium PositionsThe Qatari Riyal (QAR) traded at 76.5005 PKR in the spot market, climbing to 80.4863 PKR for one-year commitments. Qatar’s economic resilience, bolstered by its energy sector and strategic investments, continues to support the riyal’s strength against the Pakistani currency.The Kuwaiti Dinar (KWD) retained its position as the most valuable currency against the PKR, commanding 907.2029 PKR for spot rates, with forward contracts reaching 954.6537 PKR for annual tenors. This substantial valuation—making one Kuwaiti Dinar worth over 900 Pakistani Rupees—reflects Kuwait’s robust sovereign wealth, oil revenues, and stable economic fundamentals. The currency’s strength continues to impact Pakistani expatriates in Kuwait, whose remittances represent significant inflows to Pakistan’s economy.Bahraini Dinar Demonstrates Sustained ValueThe Bahraini Dinar (BHD) stood strong at 739.0671 PKR for spot transactions, progressing to 768.1793 PKR in twelve-month forward contracts. Bahrain’s pegged exchange rate system and stable economic policies continue to support the dinar’s premium positioning. The forward rate structure suggests expectations of gradual adjustment while maintaining the currency’s substantial value advantage over the rupee.Euro and British Pound Reflect European Economic DynamicsEuro Shows Year-End PositioningThe Euro (EUR) traded at 292.9152 PKR in the spot market, with one-year forward rates extending to 308.2585 PKR. This represents the European common currency’s position as Pakistan concludes 2025, reflecting ongoing monetary policy adjustments by the European Central Bank. The EUR’s performance against the PKR has been influenced throughout the year by eurozone economic conditions, inflation management efforts, and geopolitical factors affecting European markets.The forward premium structure indicates market expectations of moderate PKR weakness against the euro in 2026, though the differential of approximately 15 PKR remains relatively contained compared to historical patterns.British Pound Maintains Historical PremiumThe British Pound (GBP) commanded 352.4095 PKR for spot transactions, with annual forward contracts at 370.8178 PKR, maintaining its traditional premium against the rupee. The pound’s strength reflects the United Kingdom’s economic positioning and monetary policy stance as the year concludes. With one British pound worth over 350 Pakistani rupees, the exchange rate continues to significantly impact remittances from the substantial Pakistani diaspora in the UK, who contribute billions in annual inflows to Pakistan’s economy.The forward rate premium of approximately 18 PKR suggests market participants anticipate gradual depreciation pressures on the PKR against sterling through 2026, influenced by both UK economic performance and Pakistan’s domestic economic trajectory.Comprehensive Currency LandscapeBeyond the highlighted currencies, the December 31 rates encompassed a broad spectrum of global currencies. The Swiss Franc (CHF) was valued at 315.4058 PKR, while the Japanese Yen (JPY) traded at 1.8551 PKR, reflecting Japan’s continued low-interest rate environment.Among Asian currencies, the Chinese Yuan (CNY) was positioned at 38.3629 PKR, with the Offshore Chinese Yuan (CNH) at 38.3513 PKR. The Singapore Dollar (SGD) commanded 207.5479 PKR, and the Hong Kong Dollar (HKD) traded at 35.8582 PKR. The Indian Rupee (INR) was valued at 3.2710 PKR, maintaining its regional exchange corridor.The Australian Dollar (AUD) stood at 176.4399 PKR, the Canadian Dollar (CAD) at 194.9838 PKR, and the New Zealand Dollar (NZD) at 158.3974 PKR. Among emerging markets, the Turkish Lira (TRY) traded at 7.9645 PKR, the Malaysian Ringgit (MYR) at 62.4109 PKR, and the South African Rand (ZAR) at 15.2477 PKR.Expert Analysis: Closing Out 2025 with Cautious OptimismCurrency market experts attribute the PKR’s year-end resilience to several key factors: consistent remittance inflows from overseas Pakistanis across all regions, improved export performance in key sectors, disciplined monetary policy implementation by the State Bank, and successful completion of International Monetary Fund program reviews that bolstered investor confidence.Financial analysts note that the forward rate premiums across major currencies—particularly the highlighted USD, GBP, SAR, AED, QAR, KWD, BHD, and EUR—suggest market participants expect gradual and manageable depreciation pressures on the PKR in 2026. However, these expectations remain moderate compared to the volatility experienced in previous years, indicating improved macroeconomic stability.The sustained strength of Gulf currencies reflects the oil-exporting nations’ continued economic resilience despite global energy market fluctuations. These currencies’ stability is particularly significant for Pakistan given the massive remittance corridor from Gulf countries, which represents the largest source of foreign exchange inflows to the Pakistani economy.Market Outlook for 2026As Pakistan enters 2026, market observers maintain cautiously optimistic views about the PKR’s trajectory. Supporting factors include anticipated continued IMF program compliance, improving fiscal metrics, robust worker remittances expected to exceed $30 billion annually, and potential foreign direct investment in key sectors.However, analysts also identify risk factors that could impact currency markets in the coming year: global economic uncertainty amid geopolitical tensions, commodity price volatility particularly in energy markets, domestic political stability considerations, and external debt servicing requirements that will demand substantial foreign exchange outlays.The forward market structure, with major currencies showing premiums ranging from 3-4% (Gulf currencies) to 4-5% (USD, EUR, GBP), suggests market participants are pricing in modest depreciation expectations while maintaining fundamental confidence in Pakistan’s macroeconomic framework heading into the new year.Year-End Trading NoteNotably, several currencies including the Bangladeshi Taka (BDT) at 2.3272 PKR, Brazilian Real (BRL) at 46.7551 PKR, and Argentine Peso (ARS) at 0.2774 PKR lacked forward rate quotations beyond spot market valuations, reflecting limited forward market depth for these currencies in Pakistan’s foreign exchange market.As the final trading day of 2025 concludes, the relatively stable currency environment provides a foundation for economic planning and cross-border transactions as Pakistan moves into 2026. The performance of highlighted currencies—USD, GBP, SAR, AED, QAR, KWD, BHD, and EUR—will remain critical barometers of Pakistan’s external sector health and economic integration with key trading and remittance partner nations.Market Advisory: Exchange rates fluctuate continuously based on market conditions. Businesses and individuals should consult authorized dealers for real-time rates before executing foreign exchange transactions. The rates published represent official SBP mark-to-market valuations for authorized dealer book revaluation purposes.