Pakistani rupee set to become best performer against US dollar following record-low recovery

In September, Pakistan’s rupee emerged as the global front-runner in currency performance, driven by the interim government’s vigorous measures to curb illicit US dollar trading.

According to a comprehensive report by Bloomberg, the Pakistani rupee has experienced a remarkable surge of nearly 6 per cent during this month, a notable accomplishment given the downward trajectory of most other currencies like the Thai baht and South Korean won against the strengthening US dollar, fueled by expectations of prolonged high US interest rates.

On Thursday, the rupee exhibited resilience by rising 0.1 per cent, reaching Rs287.95 per dollar after hitting a record low of approximately Rs307 earlier in the month.

Khurram Schehzad, the Chief Executive Officer of Alpha Beta Core Solutions Pvt. Ltd., a financial consultancy located in Karachi, commented on the situation, highlighting the prevalence of leakages through informal channels such as hawala and hundi trade, which are common in South Asia.

Schehzad noted, when the USD rate reverses, everyone from hoarders to exporters, who have been holding onto their export proceeds, starts offloading their dollars.

The Bloomberg report underscores the Pakistani government’s intensified efforts to crack down on illegal dollar trading, which have significantly contributed to the rupee’s resurgence.

In addition to these measures, the central bank has raised capital requirements for smaller exchange companies and mandated large banks to establish their exchange entities, aiming to enhance transparency and oversight in the retail foreign exchange market.