Pakistan’s rupee is expected to remain broadly stable at around PKR 278 against the US dollar through the end of 2026, according to an updated macroeconomic outlook from BMI, the research unit of Fitch Solutions. The revised forecast represents a change from the earlier projection of the rupee weakening towards PKR 288 per US dollar. BMI has attributed the improved outlook to stronger foreign exchange buffers, tight monetary policy and Pakistan’s restored access to international capital markets.
The revised assessment indicates that the Pakistani currency has gained support from a stronger external position compared with earlier expectations. BMI’s outlook points to improved foreign exchange reserves as one of the key factors supporting exchange rate stability. Higher reserves provide greater capacity to manage external financing pressures and help strengthen confidence in the country’s ability to meet foreign currency obligations, reducing some of the pressure that could otherwise weigh on the rupee.
Tight monetary policy is another factor supporting the currency outlook. Elevated interest rates can help contain domestic demand and reduce pressure on the external account while also supporting the attractiveness of rupee-denominated financial assets. BMI has incorporated this monetary policy environment into its revised forecast, alongside the improvement in Pakistan’s foreign exchange position and the country’s renewed access to international capital markets.
Pakistan’s $3 billion Eurobond issuance has also contributed to the stronger external financing position highlighted in the revised outlook. Access to international debt markets provides an additional source of foreign currency funding and has supported the improvement in external buffers. The successful issuance has also been viewed as a sign of renewed access to international capital markets, helping improve the overall financial position supporting the rupee.
The revised forecast marks a notable adjustment from BMI’s previous expectation of a decline towards PKR 288 per US dollar. Under the latest outlook, the rupee is instead expected to maintain broad stability around PKR 278 through the remainder of 2026. The assessment reflects an improved balance of factors affecting the currency, although the outlook remains exposed to external risks that could affect Pakistan’s foreign exchange requirements and overall economic conditions.
One of the key risks identified in the outlook is the possibility of higher oil prices. Pakistan remains exposed to changes in international energy prices because higher oil costs can increase the country’s import bill and place additional pressure on foreign exchange demand. A sustained increase in oil prices could therefore weaken some of the buffers that currently support the rupee and create renewed pressure on the external account.
The revised BMI outlook comes as Pakistan’s macroeconomic position has strengthened, with improved foreign exchange buffers and renewed engagement with international capital markets supporting greater stability. The combination of tighter monetary conditions, stronger reserves and the $3 billion Eurobond issuance has changed the currency outlook compared with earlier expectations. However, the projected stability of the rupee will continue to depend on external financing conditions, energy prices, reserve levels and the broader performance of Pakistan’s economy through the remainder of 2026.
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