💱 THE RUPEE RATE

For every £1,000 you send home this week, your family receives approximately Rs 370,000. Rates checked 31th October 2026

📈 KSE-100 THIS WEEK

The first positive week in four. Friday was the only losing session of the five, with UBL the biggest single drag - down 0.79% to Rs409.68, taking 102.66 points off the index on its own. Wednesday added 1,269.55 points (+0.77%) to 165,736.76, and Thursday pushed on to 167,193.43 before Friday’s profit-taking.

The State Bank raised the policy rate to 12%, its first hike since April, by nine votes to one.

What happened

The Monetary Policy Committee met on Monday 26 October and raised the policy rate by 50 basis points to 12%, effective Tuesday 27 October, with nine of ten members in favour. The interest rate corridor moved with it: the floor is now 11% and the ceiling 13%. Governor Jameel Ahmad announced the decision at a press conference in Karachi. It is the second rise of 2026, after April took the rate from 10.5% to 11.5%, and it follows three consecutive holds. The next MPC meeting is Monday 14 December.

Why it matters

The MPC’s own statement is unusually direct about why. It called the decision necessary to keep inflation expectations anchored, to contain second-round effects of the ongoing supply shock, and to bring inflation back within the 5–7% target range.

“Second-round effects” is the phrase to pay attention to. A supply shock - in this case oil - raises prices directly. The danger is what happens next: transport operators raise fares, wages adjust, firms rebuild margins, and a one-off energy spike becomes generalised inflation that outlasts the oil price that caused it. The committee is raising rates not because demand is too hot, but to stop an imported price shock from embedding itself in expectations.

The Committee also noted that reserves remained stable at around $21.5 billion, now equal to three months of import cover - a meaningful threshold, and one Pakistan has not comfortably held in years. It flagged the IMF staff-level agreement. And it noted that broad money (M2) growth had accelerated to 12.7% year-on-year as of 9 October, up from 11.4% on 28 August, driven by the rise in SBP foreign exchange reserves.

The market had already moved ahead of the committee. On 26 October, one-year KIBOR was 12.79% and six-month 12.45% - both above the new 12% policy rate. Banks were pricing this in before it happened, and they are still not pricing a cut.

What it means for you

If you hold rupee deposits or certificates through your Roshan Digital Account, this is a straightforward improvement - but only on new placements and at renewal. Existing fixed-term holdings keep the rate they were booked at. If you have been sitting on an RDA balance waiting for clarity, that clarity has arrived, and the next scheduled change is not until mid-December.

The honest caveat: with October inflation projected at 9.5–10.5%, a 12% nominal rate is a real return of roughly 1.5 to 2.5%. Better than it was. Not generous.

If your family in Pakistan has a floating-rate loan - a car, a home, a business facility - their repayment rises at the next reset. Worth a conversation if they are near the edge of affordability.

The market rose 2.48% in the week the State Bank raised rates. That is not a contradiction.

What happened

The KSE-100 closed the week at 166,409.25, up 4,034.38 points or 2.48% from the previous Friday’s 162,374.87. Four of the five sessions were positive. This came in a week that included a 50bps rate rise - normally a headwind for equities - and followed three consecutive weekly declines that had taken the index roughly 20% below its late-June peak.

Why it matters

Two things explain it.

The first is that the hike was already priced. A Topline survey before the meeting found 61% expecting an increase, and the KIBOR curve had been sitting above the policy rate for weeks. When a widely expected decision lands as expected, the uncertainty premium comes off. Markets dislike not knowing more than they dislike bad news, and Monday’s session closed higher after the announcement.

The second is that the market had already fallen a long way. A 20% drawdown prices in a great deal of pessimism, and some of the week’s buying was simply value-hunting at levels not seen since the spring. Corporate results helped: Pakistan State Oil reported profit of Rs25.56 billion, with its chief executive saying PSO grew at more than twice the market pace while maintaining supplies through severe regional disruptions. Pakistan Petroleum reported Rs99 billion in profit and eleven discoveries, having drilled seven exploration and four development wells in FY26.

What has not changed is the underlying risk. The reason for the September and October sell-off - Gulf escalation and the oil price - is still live. Pak Observer quoted Brent futures at $115.47 a barrel on 28 October, with WTI at $101.33. A relief rally after a priced-in rate decision is not the same thing as the problem going away.

What it means for you

If you hold PSX positions, this week is a reminder that the index can move sharply in both directions on sentiment rather than fundamentals. The 20% drawdown was not a verdict on Pakistani corporate earnings, and neither is the 2.48% bounce.

If you were thinking of buying the dip, note that the dip is now 2.48% shallower and the geopolitical risk is unchanged. Size positions on the assumption that another leg down is possible, because it is.

Rs400.67

The price of a litre of high-speed diesel after a Re0.85 increase announced on 29 October - the first time it has crossed Rs400 in this cycle. Petrol was left unchanged at Rs377.91 in the same revision.

That split is the whole story. Petrol has actually fallen through October, from a peak of Rs398.96 on 9 October to Rs377.91 - a drop of more than Rs21. Diesel has gone the other way, climbing from Rs389.27 on 20 October to above Rs400 in ten days. The IEA warned in its October report that constraints in diesel markets specifically could persist well into 2027.

Diesel is the one that matters for household costs. It moves freight, buses, tractors and irrigation pumps. When diesel rises, it shows up in food prices and transport fares regardless of what petrol does - which is exactly the second-round effect the MPC said it was trying to contain. Short-term inflation (the SPI) rose to 11.32% in the last week of October, driven by perishable food prices.

⚡ THE QUICK THREE

1. The Finance Ministry projects October inflation at 9.5–10.5%. September came in at 10.3%, against 5.8% in September 2025 - a reminder of how much the base has shifted in a year. The ministry said the subsequent path is sensitive to international energy prices, food supplies and base effects, while describing the FY27 outlook as promising amid a stable rupee and increased foreign currency inflows. Separately, OGRA raised RLNG prices by up to 15.27% for October, which feeds into industrial costs and, eventually, electricity.

2. Banks face a new Rs20 billion capital floor. Foreign banks operating in Pakistan through branches will need assigned capital, net of losses, of at least Rs5 billion if they have up to five branches (Dawn, 29 October). The SBP also launched SMEConnect to simplify financing for smaller businesses. SME lending has been one of the genuine structural gaps in Pakistani banking for decades - the test will be whether the platform changes what actually gets approved.

3. Pakistan climbed four places in the Global Innovation Index and was labelled an “overperformer.” The report put its strengths in the digital economy - mobile app creation, ICT services exports and high-tech imports (Dawn, 30 October). This lines up with the IT export numbers we have tracked all year. Elsewhere: Pakistan and China signed an agreement to operationalise a green channel at the Sost-Khunjerab border, Pakistan and Germany agreed to expand trade under GSP+, and corporate debt issuance reached Rs291 billion in January–September 2026.

🏠 EXPAT CORNER - This week’s practical tip

Six weeks of rate certainty. What to do with them.

The next MPC meeting is 14 December. Barring something extraordinary, the policy rate is 12% until then - the longest stretch of certainty you will get in a volatile year.

If you have idle rupees in an RDA, this is the window. Term rates reprice off the policy rate, and you now know what that rate is for six weeks. Ask your bank for current term deposit and NPC rates rather than assuming - the spread over the policy rate varies by institution and tenor.

If you hold existing fixed-term deposits, check the maturity dates. Anything maturing before mid-December rolls into a better rate. Anything maturing after is a question for December.

Think about tenor, not just rate. The market is not pricing cuts - one-year KIBOR at 12.79% on the day of the hike says banks expect rates to stay high or go higher. But the MPC’s whole case for hiking is that this is a supply shock it wants to stop spreading, not a demand boom. Supply shocks reverse. If the Gulf situation de-escalates and oil falls, the easing cycle could arrive faster than the curve implies, and a longer tenor locked at today’s rate would look clever. If oil stays above $100, a shorter tenor lets you reprice higher in December. Which way you lean depends on how you read the Gulf, and nobody knows.

On remittances, nothing in this week’s news changes the picture. The rupee has been remarkably stable through a rate hike, an oil spike and an equity sell-off. A regular monthly schedule still beats trying to time a currency that is barely moving.

One thing worth doing this week that has nothing to do with rates: if your family runs a vehicle or a business that uses diesel, their costs just went up meaningfully while petrol costs fell. If you send a fixed monthly amount, it may be worth asking whether it still covers what it used to.

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

📅 WHAT’S NEXT

Hit reply: are you locking in at 12%, or waiting to see what December brings?