The Pakistani rupee has claimed the title of the world’s best-performing currency for September, reaching a seven-week high against the US dollar. It closed at Rs287.74 against the greenback, marking a gain of 0.35% or Rs1.01, according to data from the State Bank of Pakistan.
Arif Habib Limited, a leading financial firm, declared the Pakistani rupee as the best-performing currency in the world for September 2023. During the same period, other top-performing currencies, such as the Mauritian rupee, Hong Kong dollar, and Canadian dollar, gained less than 1%. In contrast, more than 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 strengthened by an impressive 6.73%, recovering 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.
Economist Ashfque Hasan Khan attributes this extraordinary recovery to the government’s crackdown on foreign currency smugglers, hoarders, and speculators. Khan emphasizes that the earlier pessimistic outlook on the rupee, predicting it would fall beyond Rs300/$, had fueled speculative depreciation, resulting in a 6% (Rs18.60) drop from August 15 to September 5, 2023. The subsequent crackdown on speculators and smugglers gradually restored the rupee to its fair value.
Khan argues that the relationship between the crackdown and the rupee’s recovery highlights the absence of a market-based exchange rate, debunking speculators’ claims. The interim government had suggested that the actual value of the rupee was Rs260/$.
Local research also predicts further recovery, projecting that 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 stabilize foreign exchange reserves at $7.80 billion.