PSX Stock vs USD/PKR: What’s the Better Store of Value in Pakistan?

In a volatile economic environment like Pakistan’s, the question often arises: should you park your money in KSE 100 stocks or hold on to U.S. dollars? The answer depends on how you define “value.”

Historically, the USD/PKR exchange rate has shown a long-term depreciation trend, with the rupee losing over 50% of its value since 2018. For many, buying and holding dollars feels like a safe bet especially in times of political uncertainty or external repayment pressure.

But holding cash in dollars, while a good option, doesn’t generate income. That’s where stocks can offer an edge. Over the long run, PSX returns including dividends, have outperformed cash and most savings accounts, especially during periods of monetary easing or high inflation.

In FY23, while the rupee fell nearly 28%, the KSE-100 index recovered over 15% in the second half. More recently, in 2025, stocks posted record-breaking single-day gains amid improving macro signals.

So what’s better?

If you’re risk-averse and have tactical focused, USD may offer stability. But for those looking to grow wealth, equities—carefully selected and diversified—offer the potential for stronger, inflation-beating returns.

In Pakistan, perhaps the real value lies not in choosing one over the other, but in balancing both strategically.