Pakistan’s economy is trapped in a dangerous illusion: the illusion of stability created by a “stable” rupee. This perceived strength, sustained through administrative controls and political signalling rather than economic fundamentals, has become a silent killer on exports and a key driver of widening trade imbalances. What appears stable on the surface conceals deeper vulnerabilities: shrinking export competitiveness, rising imports, and a consumption-led growth model unsupported by productivity or reform.
The recent improvement in some macroeconomic indicators should not be mistaken for structural progress. These gains are largely ad hoc and cyclical, not the outcome of reforms in productivity, taxation, energy pricing, logistics, or export competitiveness. Pakistan has followed this path before — artificially supporting the currency until external pressures mount, the current account deteriorates, and the rupee eventually corrects sharply, inflicting greater economic pain.
A stable currency is not inherently harmful.
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