💱 THE RUPEE RATE

For every £1,000 you send home this week, your family receives approximately Rs 371,500. Rates checked 4 July 2026

📈 KSE-100 THIS WEEK

The KSE-100 Index closed at 185,372 points on Friday, after crossing the 185,000-point mark during trading. Strong buying in banking, oil and gas, fertilizer and energy stocks supported the rally. The PSX maintained bullish momentum, extending its winning streak to a fifth consecutive session. Over the past month, the index has climbed 8.29% and is up 40.49% compared to the same time last year. The all-time high of 191,032 is now within striking distance.

The KSE-100 has just posted five straight days of gains and closed at 185,372. Here is what is driving this rally - and whether it can reach its all-time high.

What happened

Pakistan Stock Exchange maintained its bullish momentum on Friday, extending its winning streak to a fifth consecutive session as investors continued to accumulate shares across major sectors. The benchmark KSE-100 Index started the final trading session of the week on a strong note, gaining more than 500 points in early trade to climb above the 185,000-point level. By the close of trading, the KSE-100 Index had advanced 851 points, or around 0.46%, to settle at 185,372 points. Buying activity remained concentrated in heavyweight banking, oil and gas, fertilizer and energy stocks. Market analysts attributed the continued rally to sustained buying by institutional investors, including mutual funds, commercial banks and corporate investors.

Why it matters

Five straight sessions of gains is not noise. It is a signal. To understand what is driving it, you need to look at the confluence of events that have all landed in the same week. Pakistan has just closed its fiscal year with GDP growth of 3.7% - the strongest in four years. The PSX index stood at 178,414 on June 29, 2026, up 43.3% from 124,379 on June 27, 2025. Foreign exchange reserves remain at $21.5 billion. The peace deal signed on 17 June has held. Oil prices have continued to fall. And the new fiscal year beginning July 1 has brought the budget's tax cuts into effect - meaning corporate earnings are being revalued upward in real time as analysts model the impact of lower withholding taxes and reduced corporate levies.

Select value buying has helped the KSE-100 index briefly cross the 185,000 milestone in intraday trading amid persistent economic optimism. The sectors leading the gains - banking, oil and gas, fertiliser, energy - are precisely the four most directly tied to the macro themes we have been tracking all year: falling oil prices, improving reserves, lower interest rate expectations, and rising agricultural output. This is not speculative froth. It is the market pricing in a genuine improvement in Pakistan's economic fundamentals.

The all-time high of 191,032 is now approximately 3% away. Whether the index reaches it depends primarily on two things: whether the US-Iran nuclear talks in their 60-day window produce a durable agreement, and whether the SBP moves toward a rate cut at its next meeting. Both scenarios would push the market higher. A breakdown in talks or a surprise rate hike would likely trigger a pullback. The direction of travel, as of today, favours the upside.

What it means for you

The KSE-100 Index gained 10,969 points during the month and closed at 173,963, while market capitalisation increased by Rs1.14 trillion to Rs19.17 trillion. If you hold any PSX-linked instrument through your RDA, you have had an exceptional month. The question now is what to do next. For investors with a medium-term horizon of 12-24 months, the case for remaining invested is strong - the macro backdrop is the most supportive it has been in three years. For anyone sitting on the sidelines who has not yet opened a PSX position, the calculus is harder: the market is not cheap after a 40% year-on-year gain, but the earnings recovery justifies much of that re-rating. If you are considering entering, do so gradually - monthly contributions rather than a single lump sum - to average your entry price over the coming months.

Pakistan just closed FY2026 with 3.7% GDP growth - the highest in four years. Here is what the numbers actually show.

What happened

Pakistan's economy is closing FY2026 with real GDP growth of 3.7%, the highest in four years, as macroeconomic stability improved and activity recovered across agriculture, industry and services, according to the Finance Division's Monthly Economic Update and Outlook for June 2026. The report said the size of the economy expanded to $452.1 billion despite flood-related disruptions earlier in the year and volatility in global commodity markets. Average inflation remained in single digits within the target range, while the current account recorded a surplus of $255 million during July-May FY2026. The Finance Division said fiscal performance improved due to expenditure control, revenue mobilisation and provincial surpluses.

Large-scale manufacturing grew 6.4% during July-April FY2026 against a contraction of 1.5% in the same period last year. Growth was led by automobiles, food, wearing apparel, and coke and petroleum products. Sixteen of 22 LSM sectors posted growth, including textile, food, beverages, electrical equipment, automobiles and tobacco.

Why it matters

3.7% growth in a year when Pakistan was hit by the worst oil shock in a generation, mediated a war between two nuclear-adjacent powers, and navigated a double-digit inflation spike is a genuinely strong result. Three years ago, Pakistan's economy was contracting. Two years ago it was barely growing. The recovery trajectory - from 3.1% in FY2025 to 3.7% in FY2026 - reflects the cumulative impact of the IMF programme stabilising the currency, remittances hitting record highs, and the manufacturing sector recovering strongly after years of stagnation.

The numbers that stand out are in manufacturing. Sixteen of 22 LSM sectors posted growth, including textile, food, beverages, electrical equipment, automobiles and tobacco. A manufacturing recovery of this breadth - not just one or two sectors but sixteen out of twenty-two - suggests the improvement is structural rather than driven by a single commodity cycle. Automobiles growing is particularly significant: it signals that domestic consumer confidence is recovering, because nobody buys a car when they think the economy is about to fall off a cliff.

For the fiscal year beginning in July 2026 and ending in June 2027, the government has set a GDP growth target of 4% and an inflation target of 8.2%. The 4% growth target for FY27 is ambitious but not unreachable given the trajectory, the falling oil prices, the budget's income tax cuts stimulating consumer spending, and the anticipated benefits of the Pakistan-Iran trade corridor beginning to generate export revenue. Despite the economic gains, official data showed unemployment rising to 7.1% from 6.3% over the past four years, highlighting ongoing challenges in job creation as Pakistan seeks to sustain its recovery and boost long-term growth. That unemployment number is the honest caveat - growth that does not translate into jobs is growth that most Pakistanis do not feel.

What it means for you

A growing economy means a stronger rupee over time, better returns on PKR instruments as corporate earnings improve, and more opportunities for the families of overseas Pakistanis in the domestic job and business market. Foreign exchange reserves stood at $21.5 billion as of June 19, including $15.9 billion held by the State Bank of Pakistan. Those reserves - at their highest level in years - are the single most important number for rupee stability. As long as they hold above $18 billion and the IMF programme remains on track, the structural case for the rupee is the strongest it has been in this decade.

$42 billion - Pakistan is targeting $42 billion in workers' remittances during the current fiscal year, up from $41 billion last year. That target - set at the start of FY27 on July 1 - is ambitious but achievable given the trajectory of the past two years. The money that readers of this newsletter send home every week is not a private matter. It is one of the most important macroeconomic variables in Pakistan's economy, directly affecting the reserves, the rupee, and the government's ability to meet its IMF targets without emergency borrowing. Every pound, dollar, dirham and riyal converted and sent officially counts toward that $42 billion. You are part of Pakistan's economic story whether you think of yourself that way or not.

⚡ THE QUICK THREE

🏠 EXPAT CORNER - This week’s practical tip

The SBP just scrapped the Sohni Dharti Remittance Programme. Here is exactly what that means for you - and what you should do now.

This is the story that matters most to readers of this newsletter this week, and it has not been explained clearly anywhere in the mainstream press. Let us fix that.

What happened

The State Bank of Pakistan abolished two incentive schemes for banks linked to home remittances after their growing cost attracted scrutiny from the International Monetary Fund. In separate circulars issued on Thursday, the central bank announced the discontinuation of the Sohni Dharti Remittance Programme and the Telegraphic Transfer Charges Incentive Scheme with effect from July 1, 2026.

The Sohni Dharti Remittance Programme was a loyalty initiative launched by the SBP to encourage overseas Pakistanis to send remittances through official banking channels. This program operated on a point-based system, allowing remitters to accumulate reward points by utilising SBP-regulated entities for their remittances. The reward points could be redeemed for a variety of free-of-cost products and services covering paying the Emigrant Registration fee, making duty payments for imported mobile sets and vehicles, covering school fees at the Overseas Pakistanis Foundation, and renewing passports.

What changes for you right now

Three things, in plain English.

First, no further reward points will be awarded from July 1, 2026. However, reward points already accumulated until June 30, 2026, remain redeemable until June 30, 2027. If you have unused Sohni Dharti points, you have twelve months to redeem them. Do not let them expire. Log into the scheme portal this week, check your balance, and start the redemption process.

Second, the Telegraphic Transfer Charges Incentive Scheme has also been discontinued. Despite the closure, banks will continue to offer remittance services free of charge to both senders and beneficiaries. This matters: the removal of the bank subsidy does not mean you will be charged for transfers. Your transactions through official channels remain free at the receiving end.

Third - and this is the honest bottom line - industry stakeholders say the decision is unlikely to significantly dent remittance inflows, citing record remittances and a growing number of Pakistanis leaving for jobs abroad. The scheme cost Pakistan around Rs100 billion to Rs120 billion annually - money the IMF felt was better directed toward deficit reduction. The IMF's view, and the SBP's view in agreeing to end it, is that remittances are now driven by structural factors - the sheer number of Pakistanis working abroad - rather than incentive points. The evidence supports that: remittances have been at record levels for two consecutive years without any increase in the scheme's generosity.

The practical advice: keep sending through official channels — Wise, ACE Money Transfer, your bank's international transfer. The rate advantages and speed advantages of official channels over the hawala system are unchanged. The only thing that has gone is the loyalty points - not the service, not the free transfers, and not the good exchange rates.

The KSE-100 is 3% from its all-time high. Oil could fall below Rs290 per litre within weeks. FY27 has begun. Hit reply - what do you most want covered in the next issue?