Pakistan’s rupee became even more overvalued against the currencies of its major trading partners in June 2026, with the Real Effective Exchange Rate (REER) climbing to its highest level in seven years.
According to State Bank of Pakistan (SBP) data, the REER increased to 106.44 in June from 106.08 in May. The index also remained well above its 10-year average of 102.52, indicating the rupee continues to trade at a relatively stronger level than the currencies of Pakistan’s trading partners.
A REER reading above 100 generally signals that a country’s currency is overvalued in real terms. While this can lower the cost of imports, it also makes exports relatively more expensive, reducing their competitiveness in international markets.
Pakistan’s REER has been on an upward trend since early 2024, supported by macroeconomic stabilization, easing inflation differentials, and a largely stable exchange rate.
The latest reading comes as the government seeks to boost exports and narrow external imbalances. A persistently elevated REER could make those goals more difficult by eroding the price advantage of Pakistani goods in global markets.
