Pakistan’s Real Effective Exchange Rate (REER) fell to 102.5 in February 2026, down from 103.3 in January, according to the latest data from the State Bank of Pakistan released on Monday.

The REER measures the value of the domestic currency against a weighted basket of trading partners’ currencies. A reading above 100 indicates that the local currency is relatively overvalued compared to peer economies, while a lower reading reflects improved price competitiveness.

Despite the decline, the REER remaining above its long-term average suggests that the Pakistani rupee still carries mild overvaluation pressure.

Market observers expect the rupee to continue strengthening modestly against the US dollar, which closed at Rs279.3 per USD in Monday trading.

This slight improvement in the REER hints at a gradual gain in Pakistan’s currency competitiveness, which could support export growth if the trend continues.