💱 THE RUPEE RATE

For every £1,000 you send home this week, your family receives approximately Rs 379,000. Rates checked 15 August 2026

📈 KSE-100 THIS WEEK

Pakistan's main stock market index fell to 178,213 points on 18 August, losing 1.27% from the previous session. The index had a volatile week - opening positively on gas circular debt resolution news before selling pressure late in Wednesday's session dragged it down over 1,100 points. The KSE-100 settled 1,100 points lower on Wednesday after a volatile session, with UBL, ENGROH, HBL, FFC, and ATRL the major laggards collectively dragging the index down by 641 points. The index remains up approximately 19% year-on-year. The next major catalyst is the SBP rate decision in September - rate cut expectations are growing as inflation continues to fall.

Pakistan's current account deficit just narrowed 38% year-on-year in July. Here is what this tells us about where the economy is heading in FY27.

What happened

Pakistan's current account deficit narrowed by 38% year-on-year during the first month of fiscal year 2026-27, supported by higher exports and healthy workers' remittances. According to statistics released by the State Bank of Pakistan, the country posted a current account deficit of $328 million in July 2026. This compares to a deficit of approximately $530 million in July 2025. The improvement was driven by a significant surge in exports alongside a slight dip in imports, with the trade deficit narrowing by 15.22% month-on-month to $3.95 billion in July 2026 compared to $4.66 billion in June 2026. Exports in July rose to $2.94 billion, registering a 31.09% month-on-month increase.

Why it matters

The current account is Pakistan's most important external economic indicator. It measures the difference between what Pakistan earns from the rest of the world -through exports, remittances, and services - and what it spends on imports and external obligations. When it is in deficit, Pakistan needs to borrow or draw down reserves to make up the gap. When it narrows, the pressure on the rupee and reserves eases.

A 38% year-on-year narrowing in the very first month of FY27 is an exceptionally strong start to the new fiscal year. It tells you three things simultaneously. First, the export surge of 31% in July is real - orders are flowing through as shipping routes normalise post-Hormuz reopening and Pakistani exporters benefit from the budget's lower cost measures. Second, remittances remain robust - the SBP data confirms workers' remittances are running at healthy levels in July, continuing the momentum that drove the full-year FY26 record of $41.6 billion. Third, import growth has been contained - despite the economy growing at 3.7%, imports have not surged uncontrollably, which was Pakistan's chronic problem in previous growth cycles.

The government's FY27 current account target is a deficit of no more than 0.5% of GDP - approximately $2.3 billion for the full year. At $328 million in July alone, that target looks achievable but not comfortable. If imports accelerate as growth picks up and consumer spending rises - as typically happens in a recovery - the monthly deficit will widen. The key variable to watch is whether export growth can keep pace with import growth through the year.

What it means for you

A narrowing current account deficit is the single most direct positive signal for the rupee's medium-term trajectory. When Pakistan earns more dollars than it spends, the SBP does not need to intervene to support the currency. The eight consecutive weeks of rupee stability we have seen since the peace deal was signed - GBP/PKR holding its rate is directly linked to this improving external picture. For anyone sending money home regularly, the current rate environment is the most stable it has been in years and the underlying data supports that stability continuing through FY27 - barring a new external shock.

Pakistan is privatising three power companies. Twelve investors have shown interest including four foreign ones. Here is why this matters for your electricity bill.

What happened

The Privatisation Commission Board recommended restructuring plans for three power distribution companies - Faisalabad Electric Supply Company (FESCO), Gujranwala Electric Power Company (GEPCO), and Islamabad Electric Supply Company (IESCO) — to facilitate their privatisation. The restructuring plans have been prepared on the basis of audited financial statements for the period ended March 2026. Under the proposed framework a government-owned Special Purpose Vehicle will be established to carve out selected assets and liabilities of the three DISCOs, creating a commercially viable transaction structure while maximising value for the government and attracting private-sector investors. The reported interest of around a dozen investors, including four foreign entities, suggests there is commercial appetite for Pakistan's power distribution business if the operating environment can be made sufficiently predictable. The EOI deadline for GEPCO passed on 21 August - this week. IESCO's deadline is 7 September.

Why it matters

Pakistan's power sector is the single biggest structural drag on its economy. The numbers are stark. Circular debt as per the June 2026 report rose by Rs61 billion, reflecting sectoral inefficiencies. The government plans to tackle Rs1.49 trillion of the Rs3.6 trillion gas-sector circular debt, with the settlement plan expected to be partly funded through higher dividends from state-owned exploration and production companies and increased petroleum development levy collections. The total power and gas circular debt combined - money owed across the energy chain that nobody is paying - is the reason Pakistani electricity bills are high, why power companies cannot invest in better infrastructure, and why load-shedding persists despite the country having surplus generation capacity on paper.

The DISCOs - power distribution companies - are the weakest link in the chain. They collect bills from consumers but do not collect efficiently enough to pay the generation companies, who then cannot pay the fuel suppliers, who then reduce supply, causing shortages. FESCO, GEPCO, and IESCO are the first batch of DISCOs being privatised because they are considered the most commercially viable - they serve relatively wealthier consumer bases in Faisalabad, Gujranwala, and Islamabad respectively.

Investors are effectively pricing Pakistan's credibility risk into their bids - the demands being placed on the government reveal something less comfortable about the commercial appetite. Foreign investors in particular want guarantees about tariff setting, dispute resolution, and protection from political interference in pricing decisions. These are reasonable asks - and whether the government can credibly commit to them will determine whether this privatisation actually happens or becomes another stalled reform.

What it means for you

If DISCO privatisation succeeds - a significant if - the direct impact on electricity bills over a three to five year horizon is lower prices, better reliability, and fewer load-shedding hours. Private operators have financial incentives to reduce line losses and improve bill collection that government-run DISCOs structurally lack. The circular debt that currently inflates your family's electricity tariffs would gradually reduce as the supply chain dysfunction is addressed.

For the broader economy, successful DISCO privatisation would unlock billions in private investment into Pakistan's grid, reduce the government's fiscal burden from cross-subsidies, and free up SBP reserves currently implicitly backing the power sector's circular debt. It would also send a powerful signal to international investors that Pakistan can actually execute structural reforms - not just announce them. Watch the IESCO EOI deadline of 7 September and the subsequent shortlisting of bidders as the next concrete data point on whether this is moving forward.

Rs3.6 trillion - Pakistan's total gas-sector circular debt, of which the government plans to tackle Rs1.49 trillion through higher dividends from state-owned E&P companies and increased petroleum levy collections. To put this in context, Rs3.6 trillion is approximately 3% of Pakistan's entire GDP. It is money owed by gas distribution companies to gas producers - debts that have accumulated over years of under-pricing, cross-subsidies, and collection failures. It is one of the primary reasons Pakistani household gas bills have risen so sharply and why gas supply remains unreliable. The government's Rs1.49 trillion settlement plan - if executed - would reduce this burden by over 40% in a single move. Watch for the financing mechanism details in the coming weeks.

⚡ THE QUICK THREE

🏠 EXPAT CORNER - This week’s practical tip

The SBP is about to cut rates. Here is exactly what to do with your money before it does.

The evidence is building that the SBP will cut its policy rate at the September MPC meeting. Inflation is at 9.2% and falling. The current account deficit has narrowed 38%. Reserves are above $22 billion. The fiscal deficit is at a 22-year low. The peace deal is holding. Every indicator the SBP watches is pointing toward easing.

When the SBP cuts from 11.5% - whether by 50, 100, or 150 basis points - two things happen immediately that affect you as an expat investor. First, the rates offered on new Naya Pakistan Certificates and RDA fixed deposits fall. Second, existing locked-in fixed deposits are completely unaffected - your rate is guaranteed until maturity regardless of what the SBP does.

This creates a specific and time-limited opportunity. The window between now and the September MPC meeting is the last window to lock in current elevated PKR yields before they fall.

The SBP rate decision in September is the most important financial event for Pakistani expat investors this quarter. Do not let it catch you unprepared.

Next SBP rate decision: September 2026. IESCO privatisation EOI deadline: 7 September. Hit reply - what do you most want covered next week?