According to recent reports from economic correspondents in connection with foreign exchange market analysts, during this week, which is marked as the 41st in the calendar of this year 2023, the Pakistani rupee (PKR) has become the best performing world currency today. According to analysts, the axis of its minimum exchange rate against the US dollar (USD) has bounced back, and the PKR currency still has room for its strengthening. According to data from the London Stock Exchange Group (LSEG), the PKR currency has strengthened from an exchange value of 307 PKR per USD, where this rate was in September of this year 2023, to the current rate of around 275 PKR per USD.
Currently, during the European morning of Friday 20 October 2023, at approximately 5:42 CET, this Pakistani Rupee (PKR) to US Dollar (USD) currency pair was trading at a mutual exchange rate of PKR 275.7489 per USD with PKR down -1.04% against the USD for the day so far. This current decline in the PKR against the USD is explained by the forex market analysts as a standard profit taking that was created by the strong and rapid growth of the Pakistani Rupee (PKR) against the USD and other major world currencies. This current PKR exchange rate was achieved in a situation where the exchange value of the US dollar, as the world’s reserve currency measured by the US Dollar Curency Index (DXY) on the specified day and time, strengthened. According to this DXY dollar index, the value of the USD was at the point level of 106.28 USD points, with a + 0.03% increase of the point value according to this index.
The Pakistani Rupee (PKR) has gained more than 8% in its exchange value in less than a month and is trading roughly at par at 275 PKR to the US dollar, marking the strongest rebound among other currencies, outpacing other currencies quickly emerging economies, and currently the PKR is the world’s best currency in terms of absolute increase in exchange value for the past month, i.e. for September of this year 2023. However, economic correspondents also report that this strong and dynamic growth in the exchange value of the Pakistani rupee against the US dollar was linked to the territory of Pakistan as well as the unfair practices of money changers and speculators who illegally wanted to enrich themselves on this boom in Pakistan’s domestic currency. According to local media, Pakistan’s Federal Investigation Agency has launched a nationwide raid on currency exchange companies involved in illegal dollar transactions that involved buying and selling dollars through informal channels without documentation.
However, the geopolitical conditions with respect to the political development and economic situation of this Middle Eastern country do not provide the Western investor with sufficient guarantees of the return of their investments, and so even on the part of investors from developed economies, it is mostly short-term and speculative deals, economic correspondents state, referring to the fact that Pakistan is currently facing a high rate of inflation. Pakistan’s average headline inflation rose to a multi-decade high of 29.2% year-on-year in fiscal 2023, up from 12.2% last year in 2022, according to the World Bank. The high number was largely due to the weakness of Pakistan’s currency, reduced domestic subsidies for fuel and electricity and supply chain disruptions, according to a report by World Bank analysts. Inflation is closely linked to the value of a currency, as rising costs reduce the currency’s purchasing power, but despite these facts, financial experts see the potential for further strengthening of the South Asian country’s domestic currency, the Pakistani rupee (PKR).