Karachi October 9 2023: On Monday, the Pakistani Rupee extended its winning streak for the 23rd consecutive session in the interbank trading, strengthening by PKR 1.03 against the US dollar.
This marks the longest continuous positive trend in the country's history, surpassing the previous record of 22 consecutive days in November 2020. The day closed with the Pakistani Rupee at PKR 281.65, a notable improvement from the previous day's closing rate of PKR 282.68.
This remarkable appreciation of the Pakistani Rupee against the US dollar began on September 6 and has seen an overall increase of approximately PKR 25.44 in interbank trading over the course of these 23 consecutive recovery sessions, as of October 9. This turnaround can be attributed to a 'zero-tolerance' approach towards smuggling and hoarding.
However, as reported by the Forex Association of Pakistan (FAP), the open market rates for buying and selling the dollar were recorded at PKR 278.75 and PKR 281.5, respectively.
The price of the Euro decreased by PKR 1.60 to close at PKR 296.43 against the last day’s closing of PKR 298.03, according to the State Bank of Pakistan (SBP).
The Japanese Yen went down by 01 paisa to close at PKR 1.88, whereas a decrease of PKR 1.78 was witnessed in the exchange rate of the British Pound, which traded at PKR 342.95 as compared to the last closing of PKR 344.73.
The exchange rates of the Emirates Dirham and the Saudi Riyal declined by 28 and 29 paisa to close at PKR 76.68 and PKR 75.08 respectively.
Despite macroeconomic challenges and slow progress of fiscal indicators, there is a glimmer of hope for improvement as the Pakistani rupee showcases remarkable resilience against the US dollar, which experts believe would have a positive impact on national economy.
On September 6, the caretaker government announced launching a massive crackdown against the elements involved in dollar smuggling, hoarding and organized crime cartels, causing loss to the national economy.
Official sources told National News Agency that strict action was being taken after the identification of facilitators and patrons of government officials indulged in illegal economic activities.
They said complete lists of the elements involved in illegal economic activities were ready; and accordingly, an extensive crackdown was underway.
The sources said the main reason to initiate and enforce administrative measures against hoarders, black marketers, and dollar smugglers were the constant devaluation of the rupee against the US dollar.
They said the government had ordered to take strict action against unauthorized money changers and other mafias operating in the country. “Major policy reforms are underway. Commodity/currency trading will be changed.”
Whereas, the sources said surveillance systems were being upgraded at land, sea and airports, adding “Illegal movement of goods and currency will not be allowed.”
On September 5, the rupee against the dollar in the interbank trading was at Rs 307.09 and by October 9 it came down to PKR 281.65, price of the Euro declined to PKR 296.43 from PKR 330.13, British Pound to PKR 342.95 from PKR 385.22, Emirate Dirham to PKR 76.68 from Rs 83.60 and Saudi Riyal to PKR 75.08 from Rs 81.87. Whereas the buying and selling of the dollar in the open market came down from PKR 320.8 to PKR 278.75 and PKR 324 to PKR 281.5 respectively.
Experts believe that all economic indicators would start moving in the right direction once the Pakistani currency got its real worth, strength and stability.
Minister for Finance Dr Shamshad Akhtar said the foreign exchange reserves position was stable, adding that Exchange Companies Reform and anti-smuggling operations did stabilize the rupee. “This stability came without any bank intervention.”
She said the measures being taken for the value of currency include strengthening the regulatory rules for exchange companies, along with the ongoing measures for smuggling and hoarding of foreign exchange because no country can allow playing with the currency.
Commerce Minister Dr Gohar Ejaz said one of the causes of depreciation of Pakistani currency was smuggling of transit goods from Afghanistan to Pakistan which had risen from $4 billion to $6.7 billion.
He said without any intervention by State Bank of Pakistan, the dollar went down to PKR 280 from PKR 330 due to government measures and crackdown on hundi-hawala set ups.
The appreciation of rupee was also acknowledged internationally as Bloomberg in a recent report said Pakistani currency was set to become the top performer globally in the last month (September).
“Many leakages were happening through illegal channels of hawala and hundi trade from the open market,” Khurram Schehzad, Chief Executive Officer of Alpha Beta Core Solutions Pvt. Ltd, a financial consultancy in Karachi told Bloomberg.
He said, “The dollar rate reverses everybody including hoarders, exporters who are holding their export proceeds, started selling their dollars.
Meanwhile, the State Bank of Pakistan (SBP) introduced structural reforms in the Exchange Companies’ sector as part of these reforms, following which leading banks remained actively engaged in foreign exchange business for establishing wholly owned Exchange Companies to cater to the legitimate foreign exchange needs of general public.
Talking to National News Agency, General Secretary of the Exchange Companies Association of Pakistan (ECAP) Zafar Sultan Paracha confirmed that the crackdown against smugglers and hoarders of dollars had a “highly positive impact.”
He mentioned that exchange companies were depositing approximately $30-40 million to banks on a daily basis.
He pointed out that for the first time; the open market rates were lower than the interbank rates.
Muhammad Suhail, a noted economist observed that the winning streak of the rupee will depend on future economic fundamentals. “In the short run, we may see the PKR strengthening due to ongoing measures taken by the regulators for compliance with laws,” he added.