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In a recent report from Bloomberg, Pakistan’s rupee is on track to become the global leader in currency performance for this month. This significant development is attributed to the interim government’s vigorous measures against the illicit dollar trade.
According to Bloomberg’s analysis, the Pakistan rupee has experienced an impressive surge of nearly 6 percent throughout September. This achievement stands out, especially when considering that many other currencies, such as the Thai baht and South Korean won, have faced declines against the US dollar due to speculations about prolonged elevated US interest rates.
On Thursday, the currency displayed a 0.1% gain, reaching Rs287.95 per dollar. This rebound comes after a challenging period that saw the rupee hit a record low of approximately Rs307 earlier in the month.
Khurram Shehzad, the Chief Executive Officer of Alpha Beta Core Solutions Pvt. Ltd, a financial consultancy located in Karachi, shed light on the situation. He pointed out that various illegal channels, such as hawala and hundi trade, were contributing to leakages in the open market. These informal fund transfer systems are prevalent in South Asia.
“When the USD rate reverses, everybody, including hoarders and exporters holding their export proceeds, starts selling their dollars,”
Shehzad explained.
The report indicates that the Pakistani government has intensified its efforts to crack down on individuals involved in the illegal dollar trade, which has ultimately bolstered the rupee’s strength. Additionally, the central bank has raised capital requirements for smaller exchange companies and mandated that large banks establish their own exchange companies. These measures aim to enhance transparency and monitoring in the retail foreign exchange market.
