LAHORE: The exchange rate should ideally stabilise around Rs 272/USD in Financial Year 2026 (FY26) if the current account deficit (“CAD”) stands at 0.4% of GDP (which is targeted value by the govt), said market sources. If incorporated valuation for FY25 as well, get added, it should not exceed Rs 282/USD.
By the end of the FY26, the Rs/USD exchange rate is expected to stand at 291 or above, reflecting a difference of (291-268=23 rupees).
This difference corresponds to an approximate 4.6% increase in inflation for FY26. If the current exchange rate is adjusted by 23 rupees, inflation is expected to decrease, which may also lead to a reduction in the interest rate.
They said a 1% reduction in the interest rate will result in a decrease of Rs 515 billion in domestic debt interest repayments. Consequently, a 4.6% reduction will lead to a decline in debt interest servicing by approximately Rs 2,369 billion. Such fiscal space can be recruited in to the Agriculture sector, IT services and growth driving sector which is Manufacturing.
Copyright Business Recorder, 2025
