Best Pakistan Forex Brokers 2023

When looking for an online broker to trade forex or CFDs with, make sure to choose a well-regulated broker that has a strong reputation with clients. Online brokers generally offer several trading accounts for traders, including:

• Forex Trading: Exchanging one currency for another forms the basis of forex trading. Exchange rates fluctuate as one currency rises or falls relative to another in particular currency pair. The popularity of forex trading has expanded greatly once online trading became possible. The forex market is the most liquid and largest financial market globally and had a daily turnover of $5.1 trillion/day in April 2016, according to data compiled by the BIS.
• CFD Trading: Making transactions in derivative financial instruments known as contracts for difference (CFDs) allows traders to speculate on the future of their underlying assets. Such assets can consist of a currency pair, commodity, stock, stock index or other financial instrument.
• Demo accounts: Funded with virtual money, these accounts can be used to practice trading, test a strategy or check out a broker’s services and platform. Find out more on opening demo accounts here.
• Islamic accounts: These are suitable for traders who wish to trade in an account that conforms to Sharia law. Find out more on trading with an Islamic account.

With respect to trading stocks, the Pakistan Stock Exchange (PSE) provides trades in Pakistani stocks, fixed income products, derivatives and exchange-traded funds (ETFs), including Islamic products. Exchange transactions are largely executed in Pakistani rupees.

Trades and orders are entered into the PSE’s electronic trading systems known as KATS, KITS and BATS. The Karachi Automated Trading System (KATS) facilitates trading for stock brokers, the Karachi Internet Trading System (KITS) is used for online trading, and the Bonds Automated Trading System (BATS) provides a trading platform for corporate and government debt instruments.

According to Gov.uk, Pakistan has a rather favourable geographical position located “on the crossroads of Asia and the Middle East”. Pakistan is also the second largest South Asian economy, which can result in possible trading opportunities.

International trade remains quite important to Pakistan as a signatory to the South Asia Free Trade Agreement, with the World Bank reporting that imports and exports of goods and services by the country equated to roughly 25% of GDP as of 2017.

Furthermore, China and the United States remain two of Pakistan’s largest trading partners, and any strain in the relationship between these neighbours, such as an escalating trade war, could reportedly provide opportunities for Pakistan’s economy as the United States turns to importing goods from Pakistan and China moves manufacturing to Pakistan to avoid U.S. tariffs.

Pakistan also has a growing financial services sector that caters to Muslims and provides Sharia law compliant investment products and accounts.

Furthermore, Pakistan was ranked 26th for protecting minority investors by the World Bank, and the country ranked 53rd for resolving insolvencies, so the country’s legal system does apparently take care of investors and those owed debts by bankrupt companies.

As a consistent net importer with a moderate trade-to-GDP ratio of around 25% in 2017, Pakistan’s economy can suffer from the failure of major trade agreements. The economy is also especially susceptible to rising oil prices as a net importer.

Furthermore, the overall forecast for growth in Pakistan was slashed by the World Bank in January 2019, according to a report by Business Insider. The forecast was cut largely due to concerns about growing trade tensions, soft manufacturing activity and increasing financial stress among emerging markets.

The State Bank of Pakistan, the Pakistani central bank, sometimes intervenes in the currency market and with interest rate changes to stabilise the USD/PKR exchange rate, which has been depreciating in recent years. Intervention can cause sharp currency valuation shifts resulting in foreign exchange uncertainty for traders, while currency depreciation can affect businesses looking for a more stable currency environment to operate in.

When it comes to starting a business, the World Bank ranked Pakistan 130th compared to other countries, and the country ranked at 136th as an easy place to do business overall.

The country was also only in 112th place for obtaining credit, 142nd for trading across borders, 156th for enforcing contracts and 173rd for paying taxes. These low ranks indicate a possibly challenging environment for operating within the country’s financial market.

Overall, while traders and businesses may find Pakistan a challenging country to operate in for numerous reasons, some opportunities do exist in this emerging economy. Furthermore, Muslim traders may find Pakistan a relatively good place to open Sharia law compliant accounts and trade Islamic financial products.

When searching for a broker to operate through in Pakistan, traders should check to see that they offer a suitable range of asset classes, a decent trading platform, strong regulation and adequate financial security for a margin deposit.