ISLAMABAD (APP): Pakistani Rupee on Monday witnessed the 23rd consecutive recovery session as it gained Rs1.03 against the US dollar in the interbank trading and closed at Rs281.65 against the previous day’s closing of Rs282.68.
However, according to the Forex Association of Pakistan (FAP), the buying and selling rates of the dollar in the open market stood at Rs278.75 and Rs281.5 respectively.
The price of the Euro decreased by Rs1.60 to close at Rs296.43 against the last day’s closing of Rs298.03, according to the State Bank of Pakistan (SBP).
The Japanese Yen went down by 01 paisa to close at Rs1.88, whereas a decrease of Rs1.78 was witnessed in the exchange rate of the British Pound, which traded at Rs342.95 as compared to the last closing of Rs344.73.
The exchange rates of the Emirates Dirham and the Saudi Riyal declined by 28 and 29 paisa to close at Rs76.68 and Rs75.08 respectively.
Despite macroeconomic challenges and slow progress of fiscal indicators, there is a glimmer of hope for improvement as the Pakistani rupee showcases remarkable resilience against the US dollar, which experts believe would have a positive impact on national economy.
On September 6, the caretaker government announced launching a massive crackdown against the elements involved in dollar smuggling, hoarding and organized crime cartels, causing loss to the national economy.
By adopting a ‘zero-tolerance’ stance towards the smuggling and hoarding, Pakistani rupee started gaining against the dollar and since September 5 it witnessed around Rs 25.44 appreciation and Rs281.65 in interbank trading during 23 consecutive recovery sessions, as of October 9.
Official sources told APP that strict action was being taken after the identification of facilitators and patrons of government officials indulged in illegal economic activities.
They said complete lists of the elements involved in illegal economic activities were ready; and accordingly, an extensive crackdown was underway.
The sources said the main reason to initiate and enforce administrative measures against hoarders, black marketers, and dollar smugglers were the constant devaluation of the rupee against the US dollar.
They said the government had ordered to take strict action against unauthorized money changers and other mafias operating in the country. “Major policy reforms are underway. Commodity/currency trading will be changed.”
Whereas, the sources said surveillance systems were being upgraded at land, sea and airports, adding “Illegal movement of goods and currency will not be allowed.”
On September 5, the rupee against the dollar in the interbank trading was at Rs 307.09 and by October 9 it came down to Rs 281.65, price of the Euro declined to Rs 296.43 from Rs 330.13, British Pound to Rs 342.95 from Rs 385.22, Emirate Dirham to Rs 76.68 from Rs 83.60 and Saudi Riyal to Rs 75.08 from Rs 81.87. Whereas the buying and selling of the dollar in the open market came down from Rs 320.8 to Rs 278.75 and Rs 324 to Rs 281.5 respectively.
Experts believe that all economic indicators would start moving in the right direction once the Pakistani currency got its real worth, strength and stability.
Minister for Finance Dr Shamshad Akhtar said the foreign exchange reserves position was stable, adding that Exchange Companies Reform and anti-smuggling operations did stabilize the rupee. “This stability came without any bank intervention.”
She said the measures being taken for the value of currency include strengthening the regulatory rules for exchange companies, along with the ongoing measures for smuggling and hoarding of foreign exchange because no country can allow playing with the currency.
Commerce Minister Dr Gohar Ejaz said one of the causes of depreciation of Pakistani currency was smuggling of transit goods from Afghanistan to Pakistan which had risen from $4 billion to $6.7 billion.
He said without any intervention by State Bank of Pakistan, the dollar went down to Rs 280 from Rs 330 due to government measures and crackdown on hundi-hawala set ups.
The appreciation of rupee was also acknowledged internationally as Bloomberg in a recent report said Pakistani currency was set to become the top performer globally in the last month (September).
“Many leakages were happening through illegal channels of hawala and hundi trade from the open market,” Khurram Schehzad, Chief Executive Officer of Alpha Beta Core Solutions Pvt. Ltd, a financial consultancy in Karachi told Bloomberg.
He said, “The dollar rate reverses everybody including hoarders, exporters who are holding their export proceeds, started selling their dollars.
Meanwhile, the State Bank of Pakistan (SBP) introduced structural reforms in the Exchange Companies’ sector as part of these reforms, following which leading banks remained actively engaged in foreign exchange business for establishing wholly owned Exchange Companies to cater to the legitimate foreign exchange needs of general public.
Talking to APP, General Secretary of the Exchange Companies Association of Pakistan (ECAP) Zafar Sultan Paracha confirmed that the crackdown against smugglers and hoarders of dollars had a “highly positive impact.”
He mentioned that exchange companies were depositing approximately $30-40 million to banks on a daily basis.
He pointed out that for the first time; the open market rates were lower than the interbank rates.
Muhammad Suhail, a noted economist observed that the winning streak of the rupee will depend on future economic fundamentals. “In the short run, we may see the PKR strengthening due to ongoing measures taken by the regulators for compliance with laws,” he added.
