Pakistan’s Real Effective Exchange Rate rose to 106.15 in May 2026 from 105.84 in April, remaining at its highest level in seven years, according to data compiled by the State Bank of Pakistan and Topline Securities.

The latest reading is also above the country’s 10-year average REER level of 102.59, indicating that the rupee remains relatively stronger than the currencies of Pakistan’s major trading partners.

A REER reading above 100 is generally seen as a sign that a currency is becoming overvalued relative to peer economies, which can make exports less competitive while making imports comparatively cheaper.

Pakistan’s REER has been on an upward trend since early 2024, recovering from lows seen in 2023 amid improved macroeconomic stability, lower inflation differentials and a relatively stable exchange rate.

Analysts say a persistently elevated REER could create challenges for Pakistan’s export-led growth objectives at a time when policymakers are trying to boost exports and contain external imbalances.