diff --git a/erpnext/accounts/doctype/payment_entry/payment_entry.py b/erpnext/accounts/doctype/payment_entry/payment_entry.py
index 8a5d2c6c690..b4d1d39595e 100644
--- a/erpnext/accounts/doctype/payment_entry/payment_entry.py
+++ b/erpnext/accounts/doctype/payment_entry/payment_entry.py
@@ -489,7 +489,9 @@ class PaymentEntry(AccountsController):
 				ref_details = get_reference_details(
 					d.reference_doctype, d.reference_name, self.party_account_currency
 				)
-				if ref_exchange_rate:
+
+				# Only update exchange rate when the reference is Journal Entry
+				if ref_exchange_rate and d.reference_doctype == "Journal Entry":
 					ref_details.update({"exchange_rate": ref_exchange_rate})
 
 				for field, value in ref_details.items():