The Pakistani rupee, following strict measures against currency smuggling and illicit foreign exchange trade, has emerged as Asia’s best-performing currency for this fiscal year, as per The News. From July 1 to October 9, 2023, the rupee has appreciated by 1.7% against the dollar, as revealed by the MSCI Asia Emerging and Frontier Markets Index. In contrast, other Asian currencies like the Malaysian ringgit and the Korean won saw a decline in their value relative to the dollar.
After a troubling August, by September, the rupee’s performance outstripped global currencies, appreciating by 6% against the dollar. A drop to an all-time low was swiftly reversed, as stringent actions against the black market caused a 9% appreciation of the rupee in just five weeks.
Factors Boosting the Rupee’s Ascend
Despite the rupee’s commendable performance, experts warn against complacency. Fahad Rauf of Ismail Iqbal Securities noted the importance of the crackdown in stabilizing the open market rate but cautioned against the creation of another financial bubble. Reforms from the State Bank of Pakistan and actions against unlawful dollar transactions have underpinned the rupee’s upward trajectory.
Analysts remain optimistic about the rupee’s future, predicting a breakthrough beyond the 280 per dollar level, fueled by potential IMF approvals, reduced smuggling via the Afghan border, expected current account surpluses, and likely positive remittance figures. Further, government measures to curtail the misuse of the Afghan Transit Trade and declining oil prices are anticipated to bolster the balance of payments, further solidifying the rupee’s position.