💱 THE RUPEE RATE

For every £1,000 you send home this week, your family receives approximately Rs 370,000. Rates checked 25th October 2026

📈 KSE-100 THIS WEEK

A bad week, and the reason is not domestic. Fighting between Saudi Arabia and the Iran-backed Houthis intensified, oil rose, and the index fell on Thursday and again on Friday. Sana Tawfik, Head of Research at Arif Habib Limited, told Business Recorder the selling came from two things: weakness in global markets on higher oil prices, and caution ahead of Monday’s monetary policy decision amid expectations of a rate hike. Thursday alone took 2,006.67 points off the index. Of the KSE-100 constituents on Friday, 26 rose and 73 fell.

The State Bank meets tomorrow, and the market has swung from expecting cuts to expecting a hike.

What happened

The SBP’s Monetary Policy Committee meets on Monday 26 October, chaired by Governor Jameel Ahmad. The policy rate has been 11.5% since the 100bps rise on 27 April, held at three consecutive meetings since. A market survey shows 61% now expect a hike: 54% forecast 50bps and 7% a full percentage point, while 39% expect a hold. At the 14 September meeting, seven of the ten MPC members voted to hold.

Why it matters

The direction of travel has reversed. For most of this year the question was when cuts would begin. Now it is how much tightening is coming and for how long.

The cause is oil. Pakistan imports most of its energy, and the Middle East conflict has driven crude sharply higher, feeding straight into fuel, transport and electricity costs. Growth Securities expects headline inflation to rise to about 10% in October on higher electricity charges, petrol prices and food costs, and expects the MPC to raise the rate by 50 to 100bps if fuel prices stay elevated. That house has also pushed back its assumed start of monetary easing to April 2027 from October 2026, on a higher oil-price assumption of $96.30 a barrel against $72.50 previously, and raised its FY27 inflation forecast to 9.1%.

It is not unanimous. AKD expects a hold, pointing to stronger reserves and remittances. Dawn reported that analysts and bankers see the central bank caught between a rate rise and a long-awaited breakthrough in growth, with the argument that a 50bps move would preserve confidence while 100bps would raise borrowing costs for government and the private sector for little extra benefit.

The market has already shown its hand. On 5 October, three-month KIBOR was 11.97%, six-month 12.39% and twelve-month 12.68% - all above the 11.5% policy rate. Banks are not pricing a cut. September inflation was 10.26%, down from 11.15% in August, which leaves a real rate of only about 1.2 points.

What it means for you

If you hold rupee fixed deposits or certificates through your Roshan Digital Account, a hike works in your favour: RDA deposit and NPC rates are set off the policy rate, so a 50bps rise feeds through on new placements and at renewal. If you have money sitting in an RDA current account, this is the week to look at what term rates are being offered.

If you hold PSX positions, the read is the opposite. Higher rates raise the discount rate on equities and raise borrowing costs for leveraged companies - and the market has spent two sessions pricing that in. If your family in Pakistan has a floating-rate loan, their repayments move at the next reset.

Nobody outside the committee knows the decision. The announcement comes Monday evening Pakistan time.

The KSE-100 is now about 20% below its June peak, and the cause is sitting in the Gulf.

What happened

The index closed Friday at 162,374.88, down 2.43% on the week and roughly 20% from its late-June high. The all-time high of 191,032.73 was set in January. Topline’s review of Thursday’s session described a sharp sell-off of 2,007 points as escalating geopolitical tensions and rising international oil prices weighed on sentiment. On Friday, Meezan Bank, Engro Holdings, Lucky Cement, Hubco and Pakistan Petroleum together took 637 points off the index. Business Recorder’s ticker put crude at $103.27 a barrel on 23 October.

Why it matters

Pakistan’s exposure to the Gulf is threefold and it all points the same way: energy imports, remittances, and financing support. Each escalation in the Gulf touches all three at once.

The escalation is no longer only about shipping lanes - it is about the infrastructure itself. Yemen’s Houthis struck Saudi Aramco’s headquarters in Dhahran with a missile attack on 13 October, starting a fire in part of the complex, and the IEA’s October Oil Market Report warned that constraints in diesel markets could persist well into 2027, with fresh attacks on Saudi Arabia threatening to derail a recovery in global supply. Business Recorder reported this week that a drone was intercepted near Aramco’s Shaybah oilfield, killing two and injuring one Pakistani.

Finance Minister Aurangzeb put it plainly on 17 October. He told AFP that Pakistan had so far withstood the shock from skyrocketing energy prices, but that attacks on infrastructure in Saudi Arabia and other Gulf countries were “worrying” for the longer-term outlook, and said Pakistan has procured enough energy supplies to last through November and is now planning for the winter months.

The IMF has put a number on the regional damage. Its latest outlook sees the Middle East, North Africa and Pakistan region contracting 1.3% in 2026, with a 6.6% rebound in 2027 if the Iran war abates. That conditional is doing a lot of work.

What it means for you

A 20% drawdown is the kind of move that tempts people into buying the dip. The honest position is that this is not a domestic valuation story - it is a geopolitical one, and nobody can tell you when the Gulf stabilises. If you are investing in the PSX from the UK, size the position so that another 20% down would not force you to sell.

For remittances, the picture is calmer than the equity market suggests. The rupee has been stable all month. The risk to watch is not the exchange rate but the cost of living your family faces, and that is in the Quick Three below.

3.65%

Pakistan’s final FY26 growth figure, released by the National Accounts Committee on 19 October - revised down from the 3.70% estimated previously. The economy is now put at Rs126.4 trillion, or $450.4 billion, against Rs114.9 trillion and $408.7 billion the year before. Information and communication grew 9.53% and finance and insurance 4.23%. Growth in Q4 of FY26 was 2.0%.

That last number is the one that matters. Pakistan left FY26 growing at 2%, and the government is targeting above 4% for FY27. The IMF’s World Economic Outlook, released at the Bangkok annual meetings, projects 3.5% for the year with inflation close to double digits, below both the government’s 4% target and the World Bank’s 3.8% forecast. The World Bank used a meeting with the Finance Minister on Friday to urge Pakistan to move from stabilisation to sustainable growth, with a focus on strengthening investment and private sector activity.

It also means the $452bn figure many of us have been quoting since the budget is now $450.4bn. Small, but worth getting right.

⚡ THE QUICK THREE

1. LPG hit a record Rs600 a kilo, even as petrol fell. Dawn reported the record on 21 October amid shortages, with market rates running well above OGRA’s notified prices. Petrol has moved the other way: Rs377.71 a litre on 24 October, down from Rs398.30 at the 9 October peak and Rs386.30 on 16 October, under the daily pricing mechanism. Diesel was Rs393.66. Cooking fuel, not motor fuel, is the household squeeze going into winter - worth asking your family about before the cold sets in. If they run a car up to 800cc, the PM Fuel Relief Scheme still gives Rs100 a litre on a monthly quota (SMS TOK to 9771).

2. Reserves are holding, and the quality of them has improved. SBP Governor Jameel Ahmad told global investors in Bangkok that official reserves reached $21.5 billion as of 9 October, up from below $3 billion in February 2023, and that forward liabilities have fallen from more than $5.7 billion to less than $1 billion, with the primary fiscal balance recording a third consecutive annual surplus in FY26. That second figure is the underrated one: forward liabilities are dollars already promised away, so cutting them means more of the headline reserve number is genuinely usable. Total liquid reserves stood at $26.833 billion including $5.344 billion held by commercial banks.

3. The reform agenda is moving, but the tax base is not. The cabinet approved 170 amendments to the Companies Act 2017, removing 70–75% of what it called unnecessary regulation, and approved Karachi Industrial Park as a federal Special Economic Zone. Against that: only around 1,400 traders, including 150 new taxpayers, filed returns under the Tax Asaan Scheme in tax year 2026 (Dawn, 19 October). One genuine bright spot - international urea prices have fallen to $450 a tonne from a peak near $900 after China resumed supplies, which cuts a major farm input cost and the import bill.

🏠 EXPAT CORNER - This week’s practical tip

What to actually do before and after tomorrow’s decision

Don’t move money today on a guess. 61% expecting a hike is not a certainty, and 39% of the same survey expects a hold. If you were planning to lock a rupee fixed deposit, waiting 48 hours costs you almost nothing and removes the guesswork. If the rate rises, new placements price off the higher number.

Check the actual rate, not the policy rate. An 11.5% policy rate against 10.26% inflation is a real return of roughly 1.2%. At 12% it becomes about 1.7%. Those are thin margins, and your RDA provider’s offered rate is what counts, not the headline.

Remember the currency sits on top. A rupee return has to survive conversion back into sterling. The rupee has been remarkably stable - 266 consecutive sessions of small gains against the dollar - but BMI’s forecast has it weakening towards Rs292 to the dollar by end-2027. A 12% rupee yield is not a 12% sterling yield.

If you hold Naya Pakistan Certificates, the SBP issued updated SOPs for investment in them on 7 October (FD Circular Letter No. 05 of 2026). Worth asking your bank how they affect you.

On remittances, the open-market pound has sat between roughly 366 and 372 this month. Over a few weeks that range is small enough that a regular monthly schedule beats trying to time it.

General information, not personal financial advice. Confirm rates and terms with your provider before acting.

📅 WHAT’S NEXT

Hit reply: are you expecting a hike tomorrow, or a hold? And how is your family planning for winter fuel costs?