Pakistan's rupee set to become top global performer: Report
Pakistan's rupee is on track to be the best-performing currency globally this month, benefiting from a government crackdown on illicit dollar trading, reports Bloomberg News.
The Pakistani rupee has surged nearly 6 per cent in September, defying the declines seen in many other currencies such as the Thai baht and South Korean won, which weakened against the US dollar amid speculations of prolonged elevated US interest rates.
On Thursday, the rupee recorded a 0.1 per cent rise, trading at 287.95 per dollar after reaching a record low of around 307 earlier in the month.
While Pakistan's currency appears to be the top performer for the month, it's important to note that the country is grappling with a severe financial crisis, characterised by soaring inflation and significant government debt levels.
A recent World Bank report indicated that poverty in Pakistan had increased to 39.4 per cent in the last fiscal year, with an additional 12.5 million people falling into poverty due to adverse economic conditions. The report urged Pakistan to take urgent measures to achieve financial stability.
Tobias Haque, the World Bank's lead country economist for Pakistan, commented, "Pakistan's economic model is no longer reducing poverty, and the living standards have fallen behind peer countries."
It's worth mentioning that a top-performing currency doesn't necessarily equate to overall economic health. A similar phenomenon was observed in Afghanistan as the Afghani became the world's top-performing currency in the September quarter, appreciating by 9 per cent during the period.
This was primarily attributed to an influx of humanitarian aid and increased trade activities with neighboring Asian nations. However, Afghanistan is also grappling with severe economic challenges, with the United Nations estimating a shortfall in the required assistance for the country.
The Taliban regime in Afghanistan has taken steps to control the currency, including banning 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 criminalised online currency trading with the threat of imprisonment for offenders. Despite these efforts, Afghanistan's economic situation remains precarious, with millions of people facing critical hunger threats.
Therefore, while currency performance can offer insights, the broader economic context and underlying challenges are more relevant when assessing a country's financial health.