The Pakistani rupee is poised to become the best-performing global currency this month, thanks to the government’s crackdown on illicit dollar trading, according to reports from Bloomberg News.
In September, the Pakistani rupee has experienced a remarkable surge of nearly 6%, defying the declines observed in various other currencies like the Thai baht and South Korean won. These currencies weakened against the US dollar due to speculations about extended US interest rates.
On a recent Thursday, the rupee recorded a 0.1% increase, trading at 287.95 per dollar after previously hitting a record low of around 307 earlier in the month.
However, it’s crucial to acknowledge that Pakistan is grappling with a severe financial crisis, characterized by high inflation rates and substantial government debt levels.
A recent report from the World Bank revealed that poverty in Pakistan had risen to 39.4% during the last fiscal year, with an additional 12.5 million people slipping into poverty due to unfavorable economic conditions. Urgent measures were recommended to attain financial stability.
Tobias Haque, the World Bank’s lead country economist for Pakistan, remarked, “Pakistan’s economic model is no longer reducing poverty, and living standards have fallen behind those of comparable countries.”
It’s worth noting that a currency’s status as a top performer doesn’t necessarily reflect the overall economic health of a nation. A similar trend was observed in Afghanistan when the Afghani became the world’s best-performing currency during the September quarter, appreciating by 9% during that period.
This was primarily attributed to an increase in humanitarian aid and enhanced trade activities with neighboring Asian nations. Nevertheless, Afghanistan is also facing severe economic challenges, with the United Nations estimating a shortfall in the required assistance for the country.
The Taliban regime in Afghanistan has implemented measures to control the currency, including prohibiting the use of US dollars and Pakistani rupees in local transactions and imposing strict restrictions on the outflow of US dollars from the country. They have even made online currency trading a punishable offense with potential imprisonment for offenders. Despite these efforts, Afghanistan’s economic situation remains precarious, with millions of people at risk of severe food shortages.
In conclusion, while currency performance can provide insights, it is crucial to consider the broader economic context and underlying challenges when evaluating a country’s financial health.