Karachi, October 5, 2023 – The Pakistani Rupee (PKR) has experienced a remarkable strengthening of 7.65 percent against the US dollar since reaching its lowest level on September 5, 2023.
On October 5, 2023, the PKR closed at PKR 283.62 to the US dollar in the interbank foreign exchange market, marking a continuous recovery from its historic low of PKR 307.10 on September 5, 2023. This represents a cumulative gain of PKR 23.48 in the rupee’s value against the dollar during this period.
READ MORE: Pakistani Rupee on Historic Month-Long Winning Streak Against US Dollar
The exchange rate witnessed a daily gain of PKR 1.06 against the dollar on Thursday, compared to the previous day’s closing rate of PKR 284.68 in the interbank foreign exchange market.
Analysts attribute the sustained appreciation of the PKR against the US dollar to a series of administrative measures aimed at stabilizing the exchange rate. These measures include a significant crackdown on currency smuggling and hoarding, which has effectively curbed speculative trading in the currency market.
The impressive rebound of the PKR in September 2023, with a gain of 6.3 percent against the US dollar during the month, can be attributed to several key factors:
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Crackdown on Illegal Currency Dealers: A substantial crackdown on illegal currency dealers in the informal gray market, where dollars were previously traded at a premium over the official rate, has played a pivotal role in stabilizing the exchange rate.
Increased Dollar Inflows: Pakistan has experienced increased dollar inflows from exporters and remittances, providing crucial support to the PKR.
READ MORE: Pakistani Rupee Maintains Strong Streak Against Dollar, Closes at PKR 286.76
Expectations of External Financing: Growing expectations of external financial support from friendly nations and multilateral organizations have boosted investor confidence in the outlook for the rupee.
In contrast to many Asian currencies that depreciated against the US dollar following the US Federal Reserve’s announcement of prolonged high-interest rates, the PKR has emerged as a strong performer in the region. Currencies like the Thai baht and the South Korean won depreciated by more than 2 percent each during the same period.
The State Bank of Pakistan has played a proactive role in maintaining currency stability by canceling the licenses of several exchange companies involved in illegal forex transactions.
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Analysts continue to attribute the PKR’s strength to the anticipation of external financial support from friendly nations such as China and Saudi Arabia, as well as from multilateral lenders like the International Monetary Fund (IMF) and the Asian Development Bank (ADB).
The sustained strength of the Pakistani Rupee against the US Dollar is viewed as a positive development for Pakistan’s economy. It helps stabilize prices, reduces inflationary pressures, and improves investor confidence in the country’s financial markets, indicating a potentially brighter economic outlook for the nation.
