The Pakistani rupee has claimed the title of the world’s best-performing currency for September, marking a seven-week high against the US dollar. On the seventeenth successive working day of its upward trajectory, the rupee closed at an impressive Rs287.74 against the greenback, gaining 0.35% or Rs1.01, according to the State Bank of Pakistan’s data.

Leading financial firm Arif Habib Limited declared, “Pak rupee became the best-performing currency of the world during September 2023.” In the same period, other top-performing currencies such as the Mauritian rupee, Hong Kong dollar, and Canadian dollar gained less than 1%. In contrast, over three dozen currencies worldwide experienced declines ranging from 0.1% to 6.2% during the month.

Over the past 17 working days, the Pakistani currency has cumulatively strengthened by an impressive 6.73%, recovering 19.36 from its record low of Rs307.10/$ on September 5, 2023. This remarkable performance has brought the rupee back to its pre-caretaker government levels.

Read Rupee surges to seven-week high

Economist, Ashfque Hasan Khan, attributes this extraordinary recovery to the government’s crackdown on foreign currency smugglers, hoarders, and speculators. Khan emphasised that the earlier pessimistic outlook on the rupee, predicting it would fall beyond Rs300/$, had fuelled speculative depreciation, resulting in a 6% (Rs18.60) drop from August 15 to September 5, 2023. The subsequent crackdown on speculators and smugglers gradually restored the rupee to its fair value.

Khan argued that the relationship between the crackdown and the rupee’s recovery highlights the absence of a market-based exchange rate, debunking speculators’ claims. The interim government had suggested the actual value of the rupee was Rs260/$.

Local research also predicts further recovery, projecting the rupee may strengthen to Rs278-280/$ in the current cycle. The crackdown has effectively eliminated black markets, boosted foreign currency inflows through official channels, and helped stabilise foreign exchange reserves at $7.80 billion.

Published in The Express Tribune, September 29^th, 2023.

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