The Pakistan rupee is on the verge of becoming the world’s strongest currency this month, in an unexpected twist of fate. The interim government’s unwavering efforts to curb illegal dollar trade within the country have contributed to this remarkable feat.
According to a recent Bloomberg report, the Pakistan rupee surged nearly 6 percent throughout September. Due to speculations regarding prolonged US interest rates, most other global currencies, including the Thai baht and South Korean won, have been declining against the US dollar.
As of Thursday, the rupee was trading at Rs287.95 per dollar, up 0.1% from the previous record-low of Rs307 this month.
This remarkable resurgence can be attributed to the concerted effort to eliminate the illegal channels of hawala and hundi trade in the open market. Khurram Schehzad, CEO of Alpha Beta Core Solutions Pvt. Ltd, a Karachi-based financial consultancy, shared insights with Bloomberg about these developments. In South Asia, hawala and hundi are informal methods of fund transfer.
Schehzad noted, “Many leakages were happening through illegal channels of hawala and hundi trade on the open market. When the USD rate reverses, everybody, including the hoarders and exporters holding their export proceeds, starts selling their dollars.”
Pakistan’s government has taken rigorous measures to target individuals involved in illegal dollar trades, ultimately strengthening its currency.
Furthermore, the central bank has increased the capital requirements for smaller exchange companies and mandated that larger banks establish their own exchange companies. In order to enhance transparency and monitoring in the retail foreign exchange market, these steps have been taken.
Pakistan’s rupee’s remarkable resurgence in the global currency market signals a positive turn in the nation’s economy. In the near future, the rupee could become the world’s strongest currency due to a rigorous crackdown on illegal dollar trade.
