💱 THE RUPEE RATE

For every £1,000 you send home this week, your family receives approximately Rs 373,000. Rates checked 13 June 2026

📈 KSE-100 THIS WEEK

The KSE-100 closed at 170,478 on 5 June, down 2% week-on-week as Middle East uncertainty kept investors cautious. That was before today's news. Expect a sharp upward move when PSX opens Monday - a peace deal and Hormuz reopening is the single most bullish event possible for Pakistani equities. Watch banking, energy, and cement sectors specifically.

Pakistan just brokered a US-Iran peace deal. The Strait of Hormuz is set to reopen. Here is what happened - and what it means for everything.

What happened

US and Iranian negotiators, with Pakistani mediation, reached agreement on the final text of a draft peace deal on June 12, 2026, following months of direct and indirect talks addressing the end of active hostilities from the 2026 Iran war, sanctions relief, and maritime access through the Strait of Hormuz.

Under the draft deal, Iran has agreed to the removal and destruction of its nuclear material, the dismantling of its nuclear programme, and the reopening of the Strait of Hormuz. The funding of terrorist groups would be prohibited under the draft deal. The memorandum of understanding, if agreed to, would reopen the Strait of Hormuz immediately without tolls and restore pre-war shipping within approximately 30 days, as well as lifting the US blockade of Iran's ports.

President Trump has signalled imminent signing, possibly in Europe within days. The final sign-off from Iran's Supreme Leader Mojtaba Khamenei is the last missing piece.

Why it matters

Read that again slowly. The Strait of Hormuz - through which 20% of the world's oil passes, disrupted since late February - is set to reopen. Pre-war shipping restored within 30 days. The US naval blockade lifted.

This is the single most consequential geopolitical development since the war began in February. And Pakistan is at the centre of it. From brokering the initial two-week ceasefire on 8 April, to hosting the JD Vance talks in April, to mediating the back-channel communications that produced yesterday's draft text - Pakistan's role is unambiguous and historic.

Oil futures closed Friday near some of the lowest levels since the start of the US-Iran war, as the Trump administration expressed confidence that the two sides are on the verge of a deal that could reopen the Strait to oil tanker traffic. Brent crude has fallen from a peak above $120 a barrel in March to around $85 this morning. If the deal is signed and Hormuz fully reopens, oil could fall toward $70-75 - where it was before the war - within weeks.

There is one important caveat. The US account of the deal differs significantly from reports in Iranian media. Iran's official state news agency IRNA said the current draft includes no new commitments on nuclear weapons, pending further negotiations. The Supreme Leader's sign-off has not yet come. This is not done. But the direction is now unmistakably toward peace.

What it means for you

Map out what a Hormuz reopening means for Pakistan step by step.

Oil prices fall → Pakistan's fuel import bill drops → Petrol falls further from Rs381 → Transport costs fall → Food prices fall → Inflation drops from 11.7% back toward 6-7% → The SBP has no reason to raise rates further and can consider cutting later in 2026 → Lower rates boost business investment → The KSE-100 rallies toward its all-time high → The rupee strengthens on improved reserve outlook.

Every single one of those dominoes falls in Pakistan's favour. The GBP/PKR rate is already reflecting this - 373 today versus 377 three weeks ago. If the deal is formally signed, expect the rupee to strengthen further. For anyone planning a large transfer to Pakistan, the next 2-4 weeks could offer the best rates seen since before the war began.

The budget landed on 12 June. Here is the expat-specific breakdown nobody else is writing.

What happened

Finance Minister Muhammad Aurangzeb presented the federal budget for FY2026-27 in the National Assembly on 12 June, unveiling a Rs18.771 trillion spending plan. Pakistan's economy has expanded to $452 billion. Per capita income increased from $1,751 to $1,901. Large-scale manufacturing recorded growth of 6.1% and the services sector grew by 4.1%. Four specific changes in the budget directly affect Pakistani expats and their families.

Income tax rates have been cut across multiple brackets: from 23% to 20% for annual earnings between Rs2.2 million and Rs3.2 million, from 30% to 25% for Rs3.2 to Rs4.1 million, from 35% to 29% for Rs4.1 to Rs5.6 million, and from 35% to 32% for Rs5.6 to Rs7 million. The income surcharge has been completely abolished for incomes above Rs12 million. The withholding tax on property purchases by filers has been halved from 2.5% to 1.25%, and the withholding tax on property sales by filers cut from 5.5% to 2.75%. The withholding tax on overseas transactions made through Pakistani bank-issued credit and debit cards has been reduced from 5% to 0.5% - a 90% cut. The concessional 0.25% tax rate on IT export income has been extended until 2029 and advance income tax on exports reduced from 2% to 1.25%.

Why it matters

This budget is more expat-friendly than any in recent memory, and each of these four changes has a direct financial impact on readers of this newsletter.

The income tax cuts matter because most Pakistani professionals - the people whose families may read newsletters like this one - earn in the Rs2.2 million to Rs7 million annual range. A cut from 30% to 25% in that bracket is not a token gesture. It is real money back in the pocket every month from July onwards. The abolition of the surcharge above Rs12 million is equally significant for higher earners and business owners.

The property tax cuts are the biggest in years. The selling-side reduction from 5.5% to 2.75% is particularly striking - it has been one of the most complained-about costs in Pakistani real estate for years, discouraging transactions and pushing activity into the informal market. Halving it brings meaningful liquidity back to the formal property market. On a Rs20 million property sale, that is a saving of Rs550,000 in tax alone.

The overseas card transaction cut is a quiet but important win. A 5% withholding tax on every swipe of a Pakistani debit card abroad was a persistent irritation for expats visiting Pakistan and for Pakistanis using their cards internationally. Reducing it to 0.5% removes a friction that was actively pushing people toward informal currency channels. The Finance Minister explicitly acknowledged this in his budget speech.

The IT export rate extension to 2029 matters for the growing freelancer and tech worker community in Pakistan. It signals that the government is serious about building the tech export sector as a long-term pillar of the economy - not just offering a temporary incentive that disappears in a year.

What it means for you

Three actions to take before July 1 when these changes take effect.

First, if you are considering buying or selling property in Pakistan, move before prices adjust upward to reflect the improved tax environment. The combination of halved withholding taxes and a potentially strengthening rupee makes this the best entry and exit window for Pakistani property in years.

Second, if your family earns between Rs2.2 million and Rs7 million annually in Pakistan, their July pay slip will look different. Check the new slabs against their current salary. Anyone in that bracket will see a meaningful reduction in monthly withholding from their employer. They do not need to do anything - the change happens automatically.

Third, register on the FBR Active Taxpayer List if you have not already. Every single reduced rate in this budget - property, card transactions, exports - applies to filers. As an overseas Pakistani who owns property or makes investments in Pakistan, being on the ATL unlocks all of these benefits. It takes one visit to the FBR Iris portal. Do it this week.

$452 billion - Pakistan's GDP as confirmed by Finance Minister Aurangzeb in his budget speech, marking a new milestone for the country. Three years ago, at the peak of the near-default crisis in 2023, Pakistan's GDP had contracted to around $340 billion. The recovery to $452 billion - driven by the IMF programme stabilising the currency, $41 billion in annual remittances, IT exports surging past $3.8 billion, and a recovering stock market - represents 33% growth in dollar terms in just three years. Pakistan's economy is bigger than it has ever been. The work is not done - inflation is still 11.7%, poverty remains widespread, and the Iran war has caused genuine damage. But $452 billion is a number worth marking.

⚡ THE QUICK THREE

🏠 EXPAT CORNER - This week’s practical tip

The rupee is at 373. The deal is close. Oil is falling. What should you actually do with your money right now?

This is the question everyone is asking and the honest answer requires separating three different situations.

If you send money home monthly - send as normal this week. The rate at 373 is the best it has been since before the war. Do not try to time geopolitical events. Consistency beats timing every time.

If you have a large discretionary transfer planned - property purchase, investment, or a significant family expense - the calculus is interesting. The rupee could strengthen further if the MOU is signed, potentially moving toward 360-365. But there is no guarantee of timing. A reasonable approach: transfer half now at 373 and hold the other half to see where the rate goes after the signing. This way you are not fully exposed to either outcome.

If you have rupees sitting in a Pakistani savings account - do not move them back to GBP right now. The improving inflation outlook and falling oil prices mean the real return on PKR deposits is set to improve over the next two quarters. Hold your position. The direction of travel for Pakistan's economy is better today than at any point since February.

The MOU could be signed in the coming week. We will send a special update the moment it is confirmed. Hit reply - what do you most want covered in the next issue?