Pakistan Rupee will close 2023 as one of best performing global currencies - what next?
The Pakistan rupee has become one of the top performing currencies worldwide, since it bounced back from a record low of 308 to a dollar on September 6, 2023.
The recovery, as per the authorities, is attributed to a major crackdown by the Government on illegal dollar trades, thus restricting its outflow from the country. Further, Pakistan exporters had been selling dollars on a large scale, fearing further devaluation.
This is adding to the currency’s strength. Revamping of ‘sick’ public sector units under government supervision is another step to strengthen economy, consequently adding value to its currency.
It's important to note that currency markets are influenced by a complex interplay of factors, including economic indicators, government policies, geopolitics, and market sentiment. While the factors mentioned may have contributed to the PKR's recovery, other variables might also be at play.
In the year, the currency lost around 55 rupees from 226 to current rate of 281-285 to a dollar. The decline was mainly triggered by heavy imbalance trade balance caused by easing off on import restrictions coupled with clearance of backlog for goods and services..
On the back of above volatility in exchange rates, oversees Pakistanis - including those in the UAE - is adopting a cautious approach on remittances to home country. This trend has resulted in reduction of remittances volumes.
Though, the currency gurus across the world are projecting a further decline in PKR against the dollar, the trend can be stopped and with the PKR gaining strength with controlled outflow of dollars, enhanced remittances from overseas Pakistanis, economic recovery with particular focus on revamping of sick government-owned firms, and reducing gap between trade payments.