Finance Ministry retains Rs290 dollar rate assumption for FY2026-27 budget planning

The Ministry of Finance has decided to base the federal budget for fiscal year 2026-27 on an exchange rate assumption of Rs290 against the US dollar

ISLAMABAD: The Ministry of Finance has decided to base the federal budget for fiscal year 2026-27 on an exchange rate assumption of Rs290 against the US dollar, maintaining the same benchmark that was adopted for the current fiscal year.

Official documents reveal that the government has opted to retain the Rs290-per-dollar planning rate despite revising the estimated average exchange rate for the ongoing fiscal year to Rs280. The decision reflects the authorities’ confidence in the relative stability of Pakistan’s currency and the continuation of a market-driven exchange rate regime.

Finance Ministry officials said the exchange rate assumption serves as a key parameter in budget formulation, influencing calculations related to external financing needs, foreign debt servicing, development assistance, imports and other international financial obligations. The benchmark helps government planners estimate the rupee cost of payments and receipts denominated in foreign currencies.

According to officials familiar with the budget process, the rupee has demonstrated greater stability over the past two years compared to previous periods of sharp volatility. They attributed this trend to improved foreign exchange management, stronger remittance inflows and a gradual easing of pressure on the country’s external account.

Sources said the government intends to continue adhering to the market-based exchange rate mechanism agreed with the International Monetary Fund (IMF), under which the value of the rupee is determined by market forces rather than administrative controls. Policymakers believe that maintaining a transparent and predictable exchange rate framework is essential for preserving investor confidence and supporting economic recovery.

Officials noted that overseas Pakistanis’ remittances have remained a crucial source of foreign exchange, helping strengthen external reserves and reduce pressure on the local currency. At the same time, lower external payment requirements and improvements in the balance of payments position have contributed to exchange rate stability during the current fiscal year.

Economic managers expect that a relatively stable rupee in FY2026-27 could help contain imported inflation by limiting the impact of currency depreciation on fuel, food and industrial raw material costs. Stability in the exchange rate is also viewed as an important factor in supporting business planning, trade activity and investment decisions.

The Finance Ministry has incorporated the projected exchange rate into estimates for international trade, foreign loans, development funding and investment inflows as part of the broader budget preparation process. These projections will play a significant role in determining fiscal targets, expenditure plans and financing requirements for the upcoming year.