In a remarkable turn of events, the Pakistani Rupee (PKR) is poised to emerge as the top-performing currency globally for the month, a feat attributed to the government’s vigorous crackdown on the illegal dollar trade. This promising development was recently highlighted in a report by Bloomberg, shedding light on the Rupee’s impressive resurgence.
According to the Bloomberg report, the Pakistani Rupee experienced a stunning surge of nearly 6% in September. This achievement stands out significantly, especially considering the global trend where most currencies, including the Thai baht and South Korean won, faced depreciation against the US dollar due to speculations of prolonged elevated US interest rates.
On Thursday, the Rupee demonstrated its resilience, appreciating by 0.1% to reach Rs 287.95 per US dollar, following a turbulent period that had seen it plummet to a record-low of approximately Rs 307 earlier in the month.
Khurram Schehzad, the Chief Executive Officer of Alpha Beta Core Solutions Pvt. Ltd., a financial consultancy based in Karachi, offered insights into the factors behind this impressive turnaround. He explained that a significant portion of the Rupee’s strength was undermined by illegal channels of fund transfer, known as hawala and hundi trade, which are prevalent in South Asia.
Schehzad elaborated, “When the dollar rate reverses, everybody, including hoarders and exporters holding export proceeds, starts selling their dollars.” This change in sentiment further bolstered the Rupee’s position.
The Bloomberg report also highlighted the Pakistani government’s proactive measures to curtail illegal dollar trade, a key contributor to the Rupee’s newfound resilience. Authorities intensified their efforts, pursuing individuals involved in this illicit trade, thereby helping stabilize the currency.
In addition to this crackdown, the country’s central bank implemented regulatory changes to enhance transparency in the foreign exchange market. These measures included raising capital requirements for smaller exchange companies and mandating large banks to establish their own exchange companies. Such initiatives aimed to create a more transparent and easily monitored retail foreign-exchange market.
As the Pakistani Rupee continues to strengthen and regain its footing in the global currency landscape, these efforts by both the government and regulatory bodies signify a commitment to fostering stability and integrity within the country’s financial system. The Rupee’s performance in September 2023 serves as a testament to the positive outcomes that can be achieved through determined actions and vigilant oversight.
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