The Pakistani rupee has become the best-performing currency in the world in September due to a crackdown on smuggling and illegal exchanges. The currency has appreciated by 6.2% against the US dollar during this period. It is currently on a winning streak of 17 sessions, gaining nearly 7% after hitting a record low earlier in September. The rupee’s appreciation is attributed to the government’s measures against currency smuggling and hoarding. These measures have clamped down on speculative and hoarding practices in informal markets. The State Bank of Pakistan has also announced structural reforms targeting the Exchange Companies sector. Among these reforms is the directive for commercial banks to establish their own Exchange Companies as wholly-owned subsidiaries. The minimum capital requirement for Exchange Companies has also been increased. Experts believe that these measures will narrow the gap between the open and inter-bank market rates and improve remittances. The crackdown on illegal currency trade and smuggling is not seen as market intervention, but rather as compliance with the conditions set by the International Monetary Fund (IMF) in the Stand-By Arrangement.

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By hassani

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