Pakistan’s Prime Minister’s Office has directed authorities to finalize currency swap agreements with the European Union, Russia and Iran as part of efforts to reduce reliance on the U.S. dollar and expand trade settlements in local currencies, according to officials familiar with the development. 💱

The proposed agreements have been included in the Ministry of Finance’s strategic reforms agenda and are being monitored by the Prime Minister’s Delivery Unit, officials said.

Authorities are also exploring similar arrangements with member states of the Association of Southeast Asian Nations, modeled on Pakistan’s existing currency swap framework with China, which has provided access to a $4.5 billion trade settlement facility.

Officials said potential swap arrangements with Russia and Iran could help open new trade channels while easing pressure on foreign exchange reserves by allowing bilateral transactions to be settled in local currencies.

The move comes as Pakistan faces about $4.8 billion in external debt repayments this month, including a €1.3 billion Eurobond payment already made, Finance Minister Muhammad Aurangzeb said.

Separately, the Prime Minister’s Office has asked the State Bank of Pakistan and the Finance Ministry to work on bringing the policy rate below 10 percent, stabilizing the currency market, curbing dollar hoarding and expanding the use of the Asian Clearing Union for trade settlements.

Officials added that the government has also been tasked with keeping the current account deficit below $3 billion, reducing the debt-to-GDP ratio and supporting medium-term economic growth targets.