In preparation for the financial year 2024-25, the federal government has chosen to set the budget with an exchange rate of Rs295 per US dollar, according to sources within the Ministry of Finance.
This decision, while aiming to account for potential currency devaluation, has raised concerns regarding the budget’s feasibility amidst the current volatile economic landscape.
It’s reported that the anticipated budget will reflect a projected increase of Rs10 in the dollar rate compared to the preceding fiscal year. This upward trend in the exchange rate could potentially fuel inflation in the upcoming financial year. However, it may also stimulate demand for Pakistani goods in the global market, thereby bolstering foreign exchange earnings.
Furthermore, experts suggest that the depreciation of the rupee could have significant repercussions on various aspects of the economy. It may impact foreign currency reserves, influence the pricing of petroleum products, and affect development expenditure. Additionally, the anticipated increase in the dollar rate is expected to escalate external debt, import bills, and the prices of imported food items.
The looming prospect of adopting a market-based exchange rate, in line with the IMF agreement, underscores the complexities and challenges inherent in managing Pakistan’s economic trajectory amidst fluctuating currency dynamics.
