BMI forecasts Pakistani rupee to hold at Rs278/USD through 2026 as FX buffers improve
BMI, a Fitch Solutions firm, revises its 2026 rupee projection to Rs278 per US dollar, citing stronger foreign‑exchange reserves, tight monetary policy and better access to capital markets, with a later weakening to Rs292/USD by end‑2027.
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Desk Analysis
How This Affects the Exchange
Sector Effect
Positive · Buy bias
Stable rupee supports import‑dependent sectors like Power, Fertilizer and Steel, creating a Buy bias for related stocks.
Sectors & Direction
Desk read
Desk call: Buy bias · Positively affected
- PowerPositively affected
- FertilizerPositively affected
- SteelPositively affected
- BanksPositively affected
Companies Mentioned
No listed ticker was flagged. Watch the sectors above for direction.
Mentions in This Briefing
Sectors: Power, Fertilizer, Steel, Banks — Positive · Buy bias. Stable rupee supports import‑dependent sectors like Power, Fertilizer and Steel, creating a Buy bias for related stocks.
Full Story
Open on Business Recorder## Revised Currency Outlook
BMI has moved back its forecast for the Pakistani rupee, now expecting it to stay around Rs278 per US dollar through the end of 2026. The earlier estimate of Rs288/USD for year‑end 2026 has been lifted, reflecting improved foreign‑exchange buffers, a disciplined monetary stance and renewed access to international capital markets.
## Drivers of Stability
The research house points to three main factors supporting the rupee: - FX reserves have continued to grow despite higher energy import bills and sizable external debt repayments. - Monetary policy remains tight, with the State Bank of Pakistan (SBP) having raised its policy rate to 11.50% in April to curb inflation. - Capital market access has improved, reducing the risk of sudden outflows.
## Outlook Beyond 2026
BMI still anticipates a gradual depreciation, projecting the rupee to slip to about Rs292/USD by the end of 2027. The devaluation is expected to restore export competitiveness as the real effective exchange rate, which hit an eight‑year high of 107.9 in July, erodes export margins and makes imports more attractive.
## Trade and Inflation Context
The merchandise trade deficit widened sharply, rising 34.6% from USD 29.4 billion in FY24/25 to USD 39.6 billion in FY25/26. Strong remittance flows have so far mitigated a sharper external position deterioration, but they are unlikely to offset the widening deficit indefinitely. Inflation is projected to stay above the SBP’s 5‑7% target for the remainder of FY26/27 due to global energy and food price pressures, yet the central bank is expected to keep rates steady to avoid further growth slowdown.
## Risks
A prolonged escalation of the US‑Iran conflict could keep global energy prices high, widening Pakistan’s import bill and raising the risk of a sharper devaluation.
## Implications for Investors
A stable exchange rate should help contain imported inflation, support medium‑term price expectations and provide a more predictable operating environment for companies reliant on imported inputs or foreign debt.
## Conclusion
BMI’s revised outlook suggests a relatively stable rupee through 2026, with a modest weakening thereafter. Investors should monitor the trade deficit trajectory, remittance flows and geopolitical developments that could affect energy prices.